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The UK has fallen out of the top 10 global markets for financial inclusion, according to the latest Global Financial Inclusion index from Principal Financial Group.
The drop from seventh to 11th out of the 41 markets assessed was driven by reduced support from the financial services sector and relatively smaller improvements in government support compared to other markets.
The UK’s relatively lower fintech growth was cited as a potential barrier to building a healthier long-term savings culture, while the report said greater investment in technology is “critical” to secure the financial future of the population and for the UK to remain an attractive destination for capital in the long term.
Principal, who produced the index alongside the Centre for Economics and Business Research, also reported falls in the UK’s education levels, and in the uptake of government mandated pension schemes.
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Seema Shah (pictured), chief global strategist at Principal Asset Management, said the UK has “well-developed financial systems” that facilitate good access to services such as bank accounts, which enable people to save.
“However, the UK looks pretty backward-looking compared to younger markets, for example, in Asia which have ensured their financial infrastructure is tech enabled and suitable for a modern, digitised economy,” she added.
“A more digital financial system allows people to smooth their consumption, more easily track saving and spending, and push income potentials higher.
“By contrast, the UK’s comparatively lower investment in technology risks failing to modernise a long-term savings culture that will keep pace with aging demographics. The economic data for the UK is currently looking positive: we are the fastest growing economy in the G7, and GDP, unemployment and inflation are all broadly going in the right direction.
“However, investing more in the financial future of the population may be critical for the UK to remain an attractive destination for capital in the long term.”
Globally, financial inclusion has improved for the second consecutive year, with improvements across all regions. 32 out of 41 markets saw their scores increase year-over-year.