UK Government Launches Financial Inclusion Strategy with Strong Focus on Open Banking and AI

The UK government has published a new Financial Inclusion Strategy that outlines how technology, including open banking and artificial intelligence (AI), can help remove barriers to financial participation and strengthen financial resilience across the country.

The 52-page document, produced by HM Treasury with input from consumer and industry representatives, is described as the first step toward improving financial inclusion in the UK. It focuses on six key areas: digital inclusion and access to banking, savings, insurance, access to credit, problem debt, and financial education. The foreword is written by Lucy Rigby, the economic secretary to the Treasury.

Open banking appears throughout the strategy as a major tool for helping people manage their finances, compare available products, and gain access to credit, especially those with thin or impaired credit histories. According to Open Banking Limited, the UK now records more than 15 million open banking user connections per month. The document also notes that public-sector adoption is growing, with departments such as HM Revenue & Customs, National Savings & Investments, and the Department for Work & Pensions already using open banking technology in areas such as tax payments, savings products, and Universal Credit verification.

The Treasury is preparing secondary legislation to further expand open banking’s use, including the wider adoption of Variable Recurring Payments (VRPs). These payments are described as a flexible tool that allows consumers to adjust repayment amounts based on their income patterns. The FCA and the Payment Systems Regulator are currently supporting industry efforts to establish a sustainable commercial model for VRPs before moving forward with the broader framework for open banking payments.

Access to banking is described as the foundation of financial inclusion, yet about 900,000 people in the UK remain unbanked, according to the Financial Conduct Authority’s 2024 Financial Lives Survey. Although most are unbanked by choice, the strategy notes that some individuals want to open an account but cannot meet identification requirements. To address this, major banks will pilot a new cross-sector solution enabling account opening without standard ID. An Identity and Verification Working Group will be set up by the end of 2025 to design the pilot and report on progress every six months.

AI is also highlighted as a practical tool for improving financial support services. The strategy mentions that AI can save caseworkers significant time, especially through transcription and summarisation tools used during phone-based assessments. Lancashire Community Finance is cited as an example. The organisation adopted a cloud-based phone system with built-in AI transcription, saving advisers an average of 25 minutes per client, cutting administration time by 37 per cent, and increasing adviser capacity by 27 per cent.

The strategy highlights the potential of open banking to improve access to credit. Capital One UK has recently launched an initiative allowing customers who would normally be declined based on credit bureau data to link their open banking data instead. Early results show that most applicants who take this option are later approved for a credit product. The government also supports efforts to test new small-sum loan products through Fair4All Finance, with support from dormant-assets funding and upcoming regulatory sandbox participation.

Debt advice modernisation is another major theme. The Money & Pensions Service plans to collaborate with partners to test new approaches, including AI-supported casework and improved triage systems. This builds on earlier progress made under the Debt Advice Modernisation Fund.

The government will review the strategy’s implementation in two years and measure progress using outcome-based metrics. These include the number of working-age adults with modest savings, the number of unbanked adults, the percentage of adults in financial difficulty, and the number of people both needing and receiving debt advice.

The strategy concludes that advances in technology such as open banking and AI present significant opportunities to modernise financial services, increase access, and ensure more UK residents can participate fully in the financial system.