Thematic review on financial inclusion

Review report

The Reserve Bank of New Zealand - Te Pūtea Matua has completed a thematic review into how deposit takers support financial inclusion. 

We engaged with 20 deposit takers supported by a desk-based review of relevant research and publicly available information on financial inclusion policies and practices in the deposit taking sector.

Read the full Thematic Review on Financial Inclusion Practices report (PDF, 601KB)

Key insights

We found that there is general awareness and support for financial inclusion across the deposit taking sector. Key insights include: 

• Financial inclusion practices and initiatives varied across deposit takers, largely driven by organisational strategy, size and nature of operations. 
• There was limited differentiation and innovation in products designed to support financial inclusion, but greater variation in services offered particularly to ‘vulnerable’ customers and a range of broader initiatives such as enhancing financial literacy.  
• A lack of specialised staff, cost and limited revenue opportunities were seen as barriers to enhancing financial inclusion activities. 
• Responses suggested there is a low level of maturity in financial inclusion metrics to help guide decision making and review of the effectiveness of financial inclusion activities. 

Good practices observed

We heard a range of practices that entities reported as positively contributing to financial inclusion during our engagements. This included: 

Strategy and governance

• Having a formal financial inclusion strategy with clear outcomes/objectives and metrics and reporting with strong endorsement from the Board.
• Assessing current products and services from a financial inclusion perspective across the product life cycle. 
• Considering financial inclusion in the provision of physical banking services.
• Engaging and building effective relationships with different customer segments to understand their needs and preferences for accessing banking products and services. 
• Having targeted strategies and initiatives, for example, interpretation services for new immigrants, accessibility for disabled customers and dedicated services for the elderly.  
• Incorporating Māori financial inclusion as a core strand of financial inclusion efforts, including targeted efforts to improve Māori access to capital.

Delivery 

• Having dedicated teams and/or experts within the business to provide advice and support to frontline staff in serving different customer segments. 
• Training staff to ensure they are aware of relevant policies and procedures that support financial inclusion and can appropriately serve vulnerable customers.  
• Providing customers with optionality in how they interact with deposit takers based on their needs and preferences. 
• Forming partnerships with third-party service providers, including FinTechs, to support innovation and develop and deliver tailored financial solutions for vulnerable and underserved customers.  

Data, metrics and targets 

• Measuring financial inclusion to understand the customer base and identify barriers that can prevent some customers from accessing products and services.
• Using data and evidence to help inform decision making, for example, to understand the impact that branch opening hours or branch closures could have on impacted customer groups.  
• Identifying outcomes and metrics needed to measure the effectiveness of initiatives and whether those outcomes are being achieved. 

Opportunities 

While this review has identified a broad range of good practices, we consider that more needs to be done by all stakeholders to promote a truly inclusive financial system.  

We see an opportunity for greater engagement across industry, including with ourselves and CoFR where collective action and leadership could support an inclusive financial system. These include: 

• Measurement – identifying and collecting financial inclusion indicators, data and metrics to support strategy, product, service and initiative development, reporting and assessment of effectiveness.  
• Inclusive customer onboarding – increasing collaboration between regulators and deposit takers to support access to basic banking services in a timely and efficient manner.
• Cash system redesign – addressing challenges highlighted in our cash system redesign issues paper, including the reduction in access to cash services for businesses and the public. 
• Māori access to capital – building on the recent positive improvements among some deposit takers to support Māori access to capital and engagement between regulators, the private sector, iwi, Māori business and communities.  

Next steps

We encourage all deposit takers to reflect on the good practices highlighted in this report and consider embedding these or strengthening their current practices where necessary, in proportion to their size and nature of operations. 

We commend the efforts undertaken and innovative practices implemented across the deposit-taking sector but consider more can and should be done to foster a truly inclusive financial system in Aotearoa/New Zealand. We see opportunities for greater collaboration, more strategic approaches and more targeted initiatives aimed at identifying and engaging individuals who are underserved or excluded. 

Financial inclusion is an area where we expect to enhance our engagement with entities over time to understand how they are embedding financial inclusion practices across their organisation and the impact these are having.    

Insights from this review will inform the Reserve Bank’s current and upcoming financial inclusion work.