The Payments Association has underlined the potential of fintech when it comes to supporting consumers through a period of economic crisis. 

At the centre of the recommendations, the Payments Association detailed the need for the development of a rulebook regarding how government payments operate. It also outlined that reconnecting house associations with local financial support services may well be crucial for navigating a challenging economic climate. 

It comes as the group described payments and innovation as being a potential catalyst for change within the space – as the UK places combating poverty at the forefront of policy making. 

The UK economy has navigated one shock after another in recent years. With the advent and aftermath of the COVID-19 pandemic, economic hardships are becoming more pronounced for many households, particularly those at the lower end of the income scale. 

With inflation at 7.8% in April (Office for National Statistics (ONS)), and real wages continuing to fall, it has resulted in the cost of goods and services outpacing wage growth for many of the population, particularly those on lower incomes.

Pooja Bhachu, Director, Public Policy, UK&I, Mastercard – Project Lead for Project Inclusion at The Payments Association, said: “Payments innovations can help people strengthen their financial capabilities, make them more resilient to financial shocks, and improve their long term financial security. But industry and policymakers must work together to harness this innovation. They can do that by improving access to digital financial services, creating new services that are inclusive by design, and improving the regulatory environment for fintechs who are tackling social issues.”

The report provides a deeper exploration of the cost-of-living crisis, an in-depth look at the poverty premium and examines how fintech innovation, if harnessed correctly, can help mitigate the impacts of the current economic hardship, support the government’s welfare reform, and build a more inclusive and resilient financial system in the UK.

Neil Harris, Chair, The Inclusion Foundation – Chair, The Payments Association Advisory Board, added: “Industry and policymakers must work together to open up and improve access to digital financial services and take active steps to involve those people most affected by financial exclusion and the ongoing cost-of-living crisis. With this report, we hope to not only move the discussion forward but catalyse much needed action.”

Tony Craddock, Director General of The Payments Association, commented: “We are very excited to share the results of this report. Every one of us has experienced or knows someone who has been impacted by the economic hardships that are at an all-time high. It is vitally important that our industry leads the way to create change to build a brighter, better future.”