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FCA Report Highlights Rural Exclusion and Vulnerability

Ross Kelly


rural digital

Scots are more financially vulnerable than their UK counterparts and people living in rural areas are finding it increasingly difficult to access banking services, according to a report by the Financial Conduct Authority. 

A report published by the Financial Conduct Authority (FCA) has highlighted the growing differences in banking trends between rural and urban consumers, with those living in rural settings being affected by bank closures and a lack of digital accessibility.

The Financial Lives report, is the FCA’s survey of 13,000 consumers and is the largest tracking survey in the UK; focusing specifically on consumers and their use of financial services. According to the report, in rural areas – where there is a greater reliance on bank branches – a higher proportion of people have difficulty getting to a bank and tend not to be able to use online banking.

Despite this, people in rural areas are more likely to be satisfied with their services, are less likely to use high-cost loans and on average have lower levels of unsecured debt.

A concerted effort to ensure rural connectivity and digital accessibility is underway across the UK, yet consumers appear to be affected by the continued degradation of the traditional high street and are at risk of being digitally excluded.

Scottish Consumer Vulnerability

The report findings point toward a greater degree of vulnerability among Scottish consumers, with 54% of people identified as being “potentially vulnerable” compared to the UK average of 50%.

The report’s definition of vulnerability refers to adults who “may suffer disproportionately if things go wrong because they have low financial resilience.”

Scotland has an above-average concentration of adults with high-cost loans. Although the overall use of credit products fares similar to the UK average, of the total number of UK adults with high-cost loans (3.1 million), 400,000 of those are in Scotland; this equates to a 8% portion of Scottish adults compared to the UK average of 6%.

Additionally, adults in Scotland have on average more unsecured debt, with £3,400 compared to the UK average of £3,320. Not a massive disparity, however highlights a growing financial vulnerability among Scots.

Despite concerning figures the Financial Lives report suggests that Scottish attitudes toward finance are more positive than other parts of the UK. 42% of Scottish adults say they are “highly confident” in managing their money compared to the 37% average of UK adults.

Nearly one quarter of Scots claim they are highly satisfied with their financial position compared to the UK average of 21%, and 18% are highly knowledgeable about financial matters compared to the UK average of 16%.

Rural Exclusion

Consumers from rural areas across the UK are struggling with access to both bank branches and in accessing mobile banking services, the report finds; with people over the age of 55 or those with health conditions experiencing significant difficulties.

In rural areas, an above average percentage of adults (13%) aged 55 and over, or those who are younger and have a long-term health condition, have difficulty getting to a bank. This is a stark difference compared to the 9% found in urban areas.

In regards to online banking, around 70% of UK adults who never use the internet live in rural areas and as such they experience increased difficulties in accessing banking services – the take-up of mobile banking in rural areas is nearly half (23%) of that found in urban areas (45%).

Adapting to Change

The issue of branch closures is one that cannot be ignored. However, are banks letting consumers down, or merely adapting to a rapidly evolving digital environment?

DIGIT spoke to Castlight Financial CEO, Phil Grady. He noted that technology is enabling banks to offer a myriad of new services, yet this innovation is often overlooked due to a culture of bank-bashing; with people choosing to focus on bank closures and negatives rather than the ongoing innovation that is enhancing the consumer experience.

He said: “There is a lot of great innovation coming out of banks and their ability to keep up with change is fantastic.” yet still they find themselves subject to negative press.

“They’re damned if they do, damned if they don’t” he said.

Grady added: “We are very supportive of the banks, who I think often get a hard time. A number of brands we work with are trying hard to keep up with rapid change and some of their work is brilliant.”

With the pace of technological change and the rise of numerous innovative FinTech companies, Grady believes the game has changed in banking, with a focus on digital accessibility now overtaking the need for physical branch-based interactions.

Why open a branch when all your services and customer support processes can be handled digitally?

He said: “What is worth remembering is that if you were to open a bank today, would you begin looking at high streets to open branches or would you look to hire technical staff to build platforms and develop a product?

“You would follow the latter, definitely.”

Ross Kelly

Staff Writer

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