Castlefield Stock Story - Experian
Financial inclusion is crucial to Experian’s broader sustainability strategy. David Gorman outlines our engagement with Experian’s senior management and some of the steps they have taken to help with their development towards a more accessible and inclusive financial services sector.
Access to money and the financial system is fundamental to full participation in society. Having no bank account costs someone £500 a year,[1] the so-called poverty premium.
More than one million adults in the UK do not have a bank account and 22% of all adults in the UK have less than £100 in savings.[2]
Not having a bank account makes doing the basics of life much more difficult; claiming benefits, securing somewhere to live, finding and keeping paid work, even obtaining things like a mobile phone contract is made much more challenging when you have no credit history.
According to some estimates, there are around five million ‘credit invisibles’ in the UK.[3] This number includes people fleeing the conflict in Ukraine. These problems have been exacerbated recently by the rising cost of living.
The move towards a cashless society, convenient for so many of us, is unhelpful to those excluded from the banking system. The closure of bank branches and ATMs, the move to digital banking and the pandemic-induced shift to cashless payments, have all conspired to make things worse for the financially excluded as well as those who struggle with technology. Even the Bank of England is talking about a Digital Pound.[4]
We recognise the damaging effects of financial exclusion and this is why one of our investment categories covers Financial Resilience, i.e. the ability to withstand life events that could adversely affect an individual’s income and/or assets and consequently their wellbeing. The Financial Resilience category includes companies which provide products and services to help with savings and financial independence.
Last September, we engaged with Experian, whose shares we own in our Castlefield Sustainable UK Opportunities Fund, on this theme. Management at Experian, one of the world’s leading global information services company, talk about wanting a financially inclusive UK, where financial services are accessible, easy to use and meet people’s needs over their lifetime.
Improving financial lives is said to be at the heart of Experian’s strategy and much of their consumer-facing content is free at the point of use. As part of our engagement with senior management, we asked them what steps they had taken to help extend financial inclusion across the markets in which they operate and they talked us through initiatives in four areas;[5]
- Financial inclusion: increasing access to financial services
- Financial education: improving financial literacy and confidence
- Financial management: helping people manage their financial lives
- Financial security: preventing fraud and identity theft
Experian are involved in projects around the world - the company launched its United for Financial Health programme alongside NGO partners in 2020 and is on track to meet its target of connecting with 100 million individuals globally by 2024, with the aim of using financial education to empower diverse communities.[6]
Here at home, the company supports campaigns by the National Literacy Trust and the National Numeracy Initiative to deliver financial literacy content.[7] Experian also trains debt advisers and we discussed the support the company offers to debt advice charities.
The company has also worked to develop their processes around vulnerable customers, working with vulnerability experts, charities and other partners to create the first ‘vulnerability taxonomy’, which focuses on a ‘tell me once’ premise, meaning that customers can share their support needs with multiple organisations in a transparent, standardised, and consented way.
We were impressed to hear how crucial financial inclusion is to Experian’s wider sustainability strategy and the wide range of innovative ways the company has sought to develop its impact in this area.
References:
1. https://theinclusionfoundation.org/#about
2. Statistics from https://financialinclusioncommission.org.uk/
3. Experian plc - Meet the 5 million ‘credit invisible’ Brits still at risk of exclusion from the financial system
4. https://www.bankofengland.co.uk/the-digital-pound#:~:text=The%20digital%20pound%20would%20be,bank%20digital%20currency%20(CBDC).
5. https://www.experianplc.com/media/4461/experian-sr22_final.pdf Slide 4
6. Experian plc - United for Financial Health
7.https://www.experianplc.com/media/4461/experian-sr22_final.pdf Slide 15
Information is accurate as at April 2023. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.