Study: Millions Of Europeans Struggle On The Road To Inclusion

By PYMNTS | September 23, 2013

By Chanel Smith EMEA Editor (@PYMNTS_EMEA)

New research from MasterCard debunks preconceived assumptions many of us make about which consumers are financially excluded or underserved around the world. Surprisingly, there are millions of people in Europe who are either financially excluded or underserved from financial services.

“Immediately what springs to mind are people who live in underdeveloped markets, sub-Saharan Africa, South East Asia, Latin America, but what never comes to the forefront, are people in Europe,” Jennifer Rademaker, group head of core products, Europe Region for MasterCard, explained to PYMNTS.com

MasterCard conducted the study with the hopes of learning more about these consumers in order to find better ways to serve this segment. MasterCard’s research included participants from six European countries, including the UK, France, Spain, Italy, Poland and Russia.

“We specifically wanted to do a number of different markets across Europe, because it is such a diverse geographical area,” Rademaker said. “There are well served markets like the UK, some markets that are more sort of emerging such as Spain and Italy in terms of financial services development, and then other markets like Poland and Russia where really is a lot of emerging financial services and emerging consumers,” Rademaker said. “We felt it was important to have this breadth of development and diversity of different kinds of consumers and different markets.”

Contrary to characteristics that are often associated with financially excluded and underserved consumers, a large number of Europeans who fall into these categories are actually employed. The proportion of both groups that have some type of work is just under 30 percent. Furthermore, the number of consumers from these segments who are recent immigrants (living in their current country for one year or less) is comparably low at only 2 percent.

An underlying trend across all of the studied countries was consumer reliance on family and friends to find work, to borrow money and to help with online purchases. Thirty-four percent admitted that family members and friends pay for their utility payments, and almost a third (31 percent) said the same for rent or mortgage payments.

PYMNTS.com asked Rademaker to describe some of the other differences and similarities that were discovered from the research.

“Rather than country differences, what struck me were the differences in attitudes by age and the differences in attitude by rural and urban locations,” Rademaker told PYMNTS.com.

She explained evident differences between the attitudes amongst young and old consumers. The study found that young people were often more tech savvy and showed more interest in participating with newer technology in financial services, compared to the older consumers who seemed less motivated.

“Rural people are all less interested in doing things like shopping online. [Rural people] and people who live in small villages, said ‘I like shopping, it’s a treat, it’s an outing, and I don’t want to give that up.’ Whereas urban people were much more ready—they think: ‘Great, I don’t want to go to the stores, I’d rather buy it online.'”

But, perhaps the most obvious question that this research brings forth is: Why are there so many consumers in Europe who are underserved or financially excluded?

“About a quarter of the population said they didn’t have enough money to have a bank account,” Rademaker cited as the top underlying reason.

To find out the other reasons why so many European consumers remain underserved and financially excluded and more about the study’s results, listen to the full podcast below.