Growing numbers unable to access basic financial services

[box border=”full”]Research released by NAB and the Centre for Social Impact (CSI) shows that more than three million Australians don’t have access to a basic transaction account, a moderate amount of credit, or don’t have general insurance.[/box]

The report, Measuring Financial Exclusion in Australia, shows the problem is growing – with the percentage of the Australian population excluded from accessing these services rising from 15.6% to 17.7% over the past two years.

Gavin Slater, Group Executive Personal Banking at NAB, says more needs to be done and is calling on the industry to join NAB and community organisations, in finding solutions.

“At NAB, we believe Australia’s largest banks have a responsibility to help people have a healthy relationship with money,” Mr Slater said.

“Those that can’t access basic financial products find it difficult to manage basic payments and can be caught in a cycle of poverty.

“For example, when they’re faced with small emergencies, such as their car breaking down, they’ve got no means to repair or replace it.”

Mr Slater said the report found young adults, migrants and people in low-paying work were the most excluded.

To date, NAB has committed $130 million to microfinance initiatives and has one of the largest programs in the developed world, working in partnership with Good Shepherd Microfinance as well as state and federal governments.

NAB’s microfinance program supports no interest and low interest loans schemes for individuals, microenterprise loans for small businesses and a savings incentive scheme.

Customers vary from pensioners and single parents needing loans for cars and furniture, to students needing finance to pay for course fees.

To date, NAB’s program has helped to provide more than 68,000 microfinance loans to Australia’s most financially marginalised.

More than 2.5 million customers use NAB’s Classic Banking account, the only fully-featured personal transactional account available to all customers, with no monthly account keeping fees.

“We have led the industry in making banking more accessible and affordable, however financial exclusion is a deep, complex issue and it’s something the whole industry needs to tackle, if we’re going to achieve significant change,” Mr Slater said.

“We are working to find new, innovative products and distribution models, in order to get these critical services to the people who need them.”

NAB and Good Shepherd Microfinance have set a goal of providing fair and affordable finance to at least one million people on low incomes by 2018.

The report shows that the cost of maintaining basic financial services has actually decreased slightly on the prior year, however the number of people excluded from accessing them is still increasing.

CSI Research Associate and author of the report, Chris Connolly, said cost was just one contributing factor.

“Language and identification documents, a lack of financial literacy, geographical barriers, and employment arrangements such as ‘cash-in-hand work’ all contribute to growth in financial exclusion,” he said.

“Younger Australians and migrants are particularly marginalised. The casualisation of our workforce is compounding the issue, with increasing numbers of people engaged in low-paying casual, part-time or seasonal work.”

Once individuals gain access to basic financial services, they’re often able to improve their overall financial position and ultimately enter the mainstream financial system.

Read the report >