According to the World Bank, the number of adults without access to financial services has dropped from 2.5 billion in 2011 to 1.4 billion in 2021. While this is a great success, there is still a lot that can be done to further make official financial services more accessible, especially in developing economies. Therefore, this July, we explore how the fintech industry can further increase financial inclusion in developing markets, identify regional trends and remove barriers to digital services.
Having looked at some of the biggest barriers to digital banking as well as how it is facilitating access to finance in underserved communities, we now round out our focus on barriers to digital banking by focusing on the weirdest and most bizarre challenges observed in the scene.
Paper in a digital world
Transforming into the digital era can be challenging for some in the banking sector, as noted by Lasma Kuhtarska, co-founder, chief strategy officer at Noda, the open banking payments platform. In fact, many consumers are still finding that there is too much physical paperwork needed to open a digital account, as banks and financial service providers struggle to overcome traditional inclusion barriers.
“One of the strangest barriers we’ve seen is actually too much paperwork for ‘simple’ digital services. In some regions, a customer trying to open a basic account or connect their bank for online payments must still present piles of paper documents or even show up physically at a branch to ‘confirm’ their identity. This often defeats the point of digital banking altogether.
“Another surprising example: in some countries, local myths and community beliefs about online payments have a real impact. We’ve seen people hesitant to link their bank accounts online because they fear it might ‘drain’ their money overnight or because family elders distrust modern systems. In other words, a lot of inclusion barriers are psychological or cultural, not just technological. Solving them takes local trust, clear communication, and showing people how safe, simple, and empowering digital tools can be.”
Government spies?
For those excluded from the banking sector, finding a foothold in it can be daunting, explains Geri Hopkins, chief operations officer at Skyla Federal Credit Union, a not-for-profit financial cooperative that provides banking services to its members. One big reason for this is the unknown about where data from digital banking providers goes.
“One of the strangest barriers to digital banking that I’ve seen is the fear of government tracking. Some people are afraid to create online banking accounts, use digital wallets, pay bills online, or even pay with credit cards or debit cards when out shopping due to a belief that those actions allow the government to watch them and their spending habits.”
Breaking the mould
For Chris Tremont, chief digital officer, Grasshopper Bank, the digital bank serving small businesses, startups, and investors, one of the strangest barriers to inclusion is simply how business owners trying to innovate and do something differently get excluded from the financial world.
“One of the more surprising barriers to inclusion is how often business owners are excluded simply because they don’t fit into a predefined mould.
“Whether it’s a business that doesn’t align with standard categories or operates from a home address, rigid systems can create friction where there shouldn’t be any. What might look unconventional on paper is often just a reflection of how modern businesses actually operate. Inclusive banking starts with recognising that success doesn’t always look the same on paper.
“A more nuanced approach helps ensure that businesses aren’t left behind just because they don’t fit the expected mould.”
The data is there… now you need to access it
Sara de la Torre, head of banking and financial services at Dun & Bradstreet, the supplier of business information and research, notes that banks have the data to offer truly personalised, inclusive services, but they keep falling short.
“A strange and paradoxical barrier to inclusion in banking is that many institutions still don’t have a proven track record of being truly data-driven, despite being rich in data. Banks have historically positioned themselves at the forefront of technological innovation, yet when it comes to fully leveraging data to drive personalised, inclusive financial services, they often fall short.
“This creates a strange disconnect: financial institutions are sitting on mountains of valuable customer data, but due to siloed systems, legacy infrastructures, and fragmented leadership, they’re unable to unify that data or act on it effectively. Many continue to operate in a ‘technology-first’ mindset, focusing on platforms rather than insights, without transforming internal culture, processes, or talent to support a data-first strategy.
“As a result, even well-intentioned inclusion efforts can miss the mark. For example, banks may fail to detect or serve underserved populations not because the data doesn’t exist, but because it’s inaccessible, unstructured, or simply not being used. That’s a particularly odd barrier: having the data, but not the ability to unlock its value.
“There is still a need to educate certain communities on digital and the possibilities of financial services. The fact that an overwhelming number of SMEs just rely on either organic growth or services from their current account is reason to feel that government and financial institutions must collaborate and support with awareness campaigns and knowledge development.”
Getting rid of the “if it ain’t broke, don’t fix it” mentality
Financial services move forward through innovation, even if a sector doesn’t necessarily require the change. For Mark Andreev, COO at Exactly, an international payment provider, one of the weirdest challenges in the industry is people’s stubbornness to try new solutions.
“One of the strangest — and most persistent — barriers I’ve seen is how quickly people dismiss new financial tools without ever trying them. There’s a kind of built-in resistance where users make up their minds before understanding how a product actually works. It’s not always about technology or access — sometimes the hardest part is just overcoming preconceived fear of the unknown.
“I still remember when banks hired fake shoppers who were ready to spend — but only with a payment card — in a bid to simulate demand and encourage merchants to adopt POS terminals. It was a clear example of innovation running ahead of real-world readiness and how behavioural change doesn’t always follow immediately, no matter how good the technology is.
“Today, we see a similar pattern with digital wallets, crypto, or even simple banking apps. The weird part is that the technology works—it’s often the psychological barrier that holds people back. That’s why real financial inclusion isn’t just about infrastructure; it’s about trust, familiarity, and giving people the confidence to take that first step.”
The credit history catch-22
The current financial ecosystem is failing those who do not have access to their credit history from their previous countries, says John Downie, CEO of SteadyPay, the credit-related solutions provider, as he notes how they can easily find themselves in an unbanked situation with no escape.
“One of the most peculiar barriers we’ve encountered is what I call the ‘perfect history paradox. We’ve seen cases where individuals with spotless payment records but limited credit history are rejected for basic financial products. In one instance, a highly-skilled immigrant professional with a six-figure salary couldn’t access a mobile phone contract because they had no UK credit history – despite having substantial savings and a perfect payment record abroad.
“This illustrates how our system sometimes prioritises lengthy credit histories over actual financial responsibility, creating catch-22 situations where people can’t build credit because they don’t already have it.”
How has it got this far?
For Matthew Sanders, founder and executive chairman of Suits Me, a banking alternative for people who are underserved by traditional banks, one of the must puzzling barriers in the digital banking sector is simply how so many people have been allowed to become unbanked in an ecosystem which prides itself on being one of the world’s leading innovators.
“Not weird, but often overlooked: in the UK, over one million people are un- or underbanked. That’s one million people who struggle to receive wages, pay bills, or make everyday transactions the rest of us take for granted.
“It’s not just a financial issue but a social one, and many of those affected are in precarious or marginalised positions: gig workers, people on zero-hour contracts, new migrants, non-English speakers, the elderly, people with no fixed address, ex-offenders, and those with limited or poor credit histories. Perhaps the weirdest barrier to inclusion is that the financial services industry has allowed limited banking access for millions of people to reach such a scale.
“Despite the UK’s global leadership in financial innovation and its role as a fintech hub, large segments of our society remain excluded from essential financial services. Being unbanked, and subsequently unable to access digital banking, creates a system where some people can thrive, whilst others remain locked out. The next phase of digital banking must focus as much on who it serves as how it works, because financial access should be foundational, meaningful, and consult the very people it looks to serve.”
The single-source mindset
Andy Smith, CEO at Snap Finance UK, the lending solutions platform, explores how the UK currently has a single way of obtaining data and if it does not match, onboarding APIs reject consumers, forcing them out of the financial ecosystem.
“The oddest barrier we see is pure data complacency from firms, the industry’s blind faith in single, static datasets and services. Take something as simple as a postcode lookup. The Royal Mail adds thousands of delivery points every month, yet vendors and firms often rely on outdated postcode address files. Buyers on brand-new estates find that their address ‘doesn’t exist’, causing onboarding APIs to reject them outright.
“On a broader scale, the UK welcomed nearly a million new residents last year. Our own testing shows that a significant percentage of them struggle to obtain credit and often fail automated KYC checks. The issue is compounded by firms relying on a single credit bureau, which leads to ‘no file’ results for thinner-file consumers. Domestically, over five million UK adults remain ‘credit invisible’ for similar reasons, with many firms not reporting credit data across all credit reference agencies.
“We must reject the single-source mindset. At Snap, we triangulate multiple data sources, incorporate open banking, and are currently exploring the effectiveness of leveraging data from applicants’ home-country credit bureaus. This helps new-to-country individuals demonstrate positive repayment histories and access credit in the UK. We ensure customer data is shared with all major UK credit reference agencies, enabling individuals to obtain credit elsewhere.”
