Every day, millions of UK households navigate sharp trade-offs between paying bills, managing debt, saving and building resilience. The UK has one of the most mature financial systems in the world, but that maturity conceals deep structural inequalities. Too many individuals and communities are still unable to access or benefit from the financial services they need to participate fully in society, and unless collective action is taken to change business and policy agendas, financial exclusion will deepen.
The economics of inclusion
Financial inclusion is often discussed as a social problem, and rightly so, but it is also an economic issue. The strength of the UK’s financial system hinges on whether individuals and communities can access and benefit from essential financial services. A financial system that fragments or fails to support financial participation is one that risks slower growth and diminished social stability, undermining the UK’s attractiveness to long-term institutional investors.
At EdenTree, we began an engagement initiative on financial inclusion in early 2025, structured around three pillars: accessibility; affordability and resilience. Each pillar captures a distinct barrier faced by UK households:
- Accessibility looks at whether people can use essential financial services, be that through physical channels (branches, ATMs, community hubs or Post Office counters) or digital channels. Between 2015 and 2024, more than 6000 branches were closed, leaving around 1,500 villages and towns without a local banking facility. While digital access has bridged the gap to some extent, digital capability remains a hurdle
- Affordability assesses whether the appropriate products for an individual’s needs are available to them at a reasonable cost. Financial products must not only be available, but affordable and fair, so that financially vulnerable individuals are not forced into high-cost or exploitative options
- Resilience concerns the ability of individuals and communities to absorb and recover from financial shocks. Savings play a large part in this, but resilience also relies on elements such as insurance, financial education and support.
Lack of measurement obscures encouraging progress
As part of our staged approach, we chose to focus the initial phase of our engagement on accessibility. This was largely focused on building societies, which have often maintained a stronger commitment to physical presence and local accessibility than larger commercial banks.
Our early conversations highlighted some encouraging practice. Building societies are an excellent example of a sector making significant contributions to social outcomes, and throughout this stage of the engagement we saw examples of evolved branch purposing, outreach partnerships, advice services and product innovation aimed at underserved groups.
But the work also exposed a systemic problem. Financial inclusion in the UK suffers less from a lack of willingness than from a lack of measurement. Many institutions are doing work that may have meaningful social value, but the outcomes are not always quantified, comparable or visible, leading to accessibility gaps being overlooked. Better visibility would bridge the information gap and help identify underserved areas where increased presence or innovation would be most helpful.
Our stewardship asks
Following this initial stage of our engagement, we have set out two key “stewardship asks”:
- Transparency: Poor visibility is deepening the inequality experienced by underserved communities. To effectively address this, the industry first needs sight of who these groups are and the unique set of accessibility limitations they face. By publishing data on proximity to branches, or alternative service points, the sector could help to identify geographic or demographic financial deserts where new models are needed the most.
- Innovation: Many institutions are willing and capable of pioneering practices, but in order to drive meaningful change in financial inclusion, scalability and collaboration will be essential. Financial institutions must establish a clear strategy geared towards maintained physical presence and enhanced digital access and pursue opportunities for partnerships, industry initiatives and policy collaboration to lay the foundations of collective action and systemic change.
A shifting policy backdrop
The UK government’s Financial Inclusion Strategy has rightly brought renewed attention to access, affordability and resilience. But while government can set strategy, we believe investors have a role to play in pushing firms to innovate responsibly and allocate capital in ways that support inclusion and economic growth.
The next phase of our work will focus on affordability, looking closely at product design, pricing fairness and access to affordable credit. The engagement will also extend beyond building societies to include retail banks and housing associations, seeking industry standards for disclosure and place-based innovation.
There is no single universal driver of financial exclusion, but rather an accumulation of disadvantages unique to the lived experience of each individual or community. Low income, poor digital access, disability, caring responsibility, and geographic isolation can all play a large role, and can interact in a multitude of ways for different groups.
That complexity is why transparency and measurement are so crucial. By understanding the spectrum of challenges faced by individuals, communities and financial institutions, we hope to build momentum for a broader investor ecosystem to hold the financial sector to higher standards, presenting a practical path to align long-term capital with the UK’s social and economic renewal.
