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Financial inclusion has been a fintech buzzword for years, yet 2025 appears to be the one year where we finally see real momentum… or maybe not. As governments, banks, and fintechs try out various methods of plugging financial gaps, the question is: are we really heading in the right direction?
Throughout the UK, policymakers have made financial systems more accessible to enable increased SME access to finance, a step with the potential to democratise lending for historically excluded businesses. By contrast, women-led fintech businesses still raise proportionately small amounts of capital, with female-owned businesses attracting only 2% of total venture capital investment in financial services (Deloitte, 2024). Amidst AI-driven risk analysis and the growth of embedded finance, numerous entrepreneurs and businesses are still shut out of the financial system.
Yet access to finance is not only a question of availability, but of usability and trust. As Banking the World: Empirical Foundations of Financial Inclusion highlights, it does not necessarily follow that making credit more available will result in financial inclusion. Products must be designed around actual user needs, embedded within their financial lives, and developed with accessibility in mind. For fintech to close financial gaps for real, it has to do more than make funding access, it has to make funding access, relevance, and fair distribution.
I've witnessed firsthand—having worked both in banking and fintech—how access to finance (or a lack of it) dictates the fate of a business. At Juice, I witness SMEs that are digital-first but are unable to get funding, not for a shortage of potential, but because mainstream credit systems weren't designed for them. Fintech can alter this, but only if the sector is genuinely about inclusion and not merely innovation.
This article explores 3 critical areas where fintech can level the playing field:
Leveraging alternative data to assess creditworthiness beyond traditional scoring.
Expanding embedded finance to integrate funding into everyday platforms.
Closing gender and diversity gaps in fintech funding.
For fintech to truly transform financial access, these areas must become its highest priority.
Traditional credit structures have long disenfranchised companies and entrepreneurs with no assets, no long credit record, and no traditional financial statements. Consequently, SMEs, gig workers, and underbanked communities have no access to financing, even when many have healthy financials.
Fintech is changing with alternative analysis of information in testing credit worthiness. Lenders no longer rely exclusively on credit scores and balance statements alone. AI lenders in modern times assess real-time payment behavior, trends in cash flow, and even alternative sources such as payments for rentals, payments through mobile, and performance in sales through e-commerce channels.
Credit worthiness determination for years, years of analysis of credit danger, and years' worth of financials have long been a precondition for a loan. Traditional approaches exclude companies with unorthodox operations—from high early-growing startups to SMEs with variable cash flow in holidays and off-seasons. Central failures include:
Trapped in traditional credit scoring: High-potential companies fall below scoring requirements.
Collateral lending: SMEs and web companies don't sit with assets, but use them for investments.
Not having a traditional banking record: Alternative payment networks' use by gig workers and entrepreneurs shut them out of lenders' books.
According to a report by Deloitte (2024), financial institutions increasingly use alternative sources of information in gauging credit worthiness, opening doors for previously unserved groups of lenders.
By using AI and real-time financial information, fintech lenders make judgments about credit worthiness that accurately represent a company’s real financial performance, not restricted access through traditional requirements. Central breakthroughs include:
AI-powered analysis of cash flow – Lenders assess real-time earnings trends, not frozen credit scores.
Payment behavior tracking – Rental payments, utility payments, and payments to providers paint a truer picture of financial stewardship
E-commerce and transactional data – Online sellers can confirm financial solidity with sales data.
The transition is in motion, and it's taking effect. According to BCG (2024), alternative data is opening funding for SMEs in its millions, including in emerging economies, in which traditional credit structures have shut out whole industries in the past.
Where fintechs have gone first, traditional financials have taken a little time to follow, with regulators even further behind, many with a request for easier guidance for alternative data use in terms of fairness and transparency. To level the field, fintech will have to make alternative data work:
Make alternative data models uniform for easier use in financials.
Make AI use ethical, in an attempt to remove bias in computerised decisioning.
Collaborate with regulators to include alternative data in compliance frameworks.
Alternative credit assessment isn't about innovation, but about fairness in access to finance. By shattering traditional barriers, fintech can bridge the funding divide and deliver real opportunity for disadvantaged companies.
Many businesses and individuals lack access to traditional banking services, making it difficult to obtain credit, process payments, or manage finances effectively. Embedded finance is addressing this issue by integrating financial products directly into the platforms people already use, reducing barriers to entry and expanding access to essential financial tools.
Recent macroeconomic trends highlight why accessible financial services are more important than ever. Inflationary pressures persist, with UK inflation rising to 3.0% in January 2025, driven by higher transport and food costs (Reuters, 2025). In this economic climate, businesses and consumers need seamless access to credit and financial management tools—which embedded finance provides by integrating lending, payments, and banking into everyday platforms.
Historically, financial services have been disconnected from the daily operations of businesses and consumers. SMEs often have to apply separately for loans, integrate third-party payment processors, or manually track expenses. Embedded finance eliminates these steps by bringing financial tools into existing digital ecosystems, such as:
E-commerce platforms offering instant financing at checkout for businesses purchasing inventory.
Payroll systems providing employees with early wage access without needing payday loans.
Freelance and gig platforms embedding lending options tailored to workers with unpredictable income.
By making financial services part of existing workflows, embedded finance ensures that individuals and businesses can access credit and payments at the moment they need them, rather than through a complex, disconnected process.
Fintechs are driving the expansion of embedded finance by partnering with non-financial companies to offer seamless, contextual financial services. Some key developments include:
Revenue-based lending within accounting software, allowing businesses to access funding based on real-time cash flow data.
Supply chain financing within B2B marketplaces, enabling businesses to delay payments while maintaining supplier relationships.
Integrated insurance products within gig economy platforms, ensuring workers have financial protection without needing separate policies.
Financial institutions are recognizing this shift and adjusting their strategies. HSBC, for example, is intensifying its investment in wealth management and transaction banking, two areas closely tied to embedded finance, as part of its strategy to expand financial services beyond traditional banking (Financial Times, 2025). This signals a growing alignment between fintech-driven embedded finance and traditional banking institutions, paving the way for more inclusive financial services.
While embedded finance is rapidly growing, many financial institutions and regulators are still catching up. To maximise its impact on financial inclusion, fintechs and policymakers need to:
Ensure regulatory compliance so that embedded financial products meet the same standards as traditional financial services.
Expand partnerships between fintechs and non-financial companies to integrate financial tools into a wider range of industries.
Educate businesses and consumers on how embedded finance can improve access to credit and payments.
By integrating financial tools directly into digital platforms, embedded finance is removing long-standing barriers to financial inclusion. With banks like HSBC reallocating resources toward AI and embedded services, and fintechs continuing to innovate, the gap between traditional and alternative financial services is closing. As adoption increases, embedded finance has the potential to reshape how businesses and individuals access and manage money, making financial services more inclusive and accessible for all.
Gender bias in funding remains a major obstacle for women-led fintech startups. Despite ongoing discussions about gender equality in finance, the numbers show little progress. The persistent funding gap highlights the systemic barriers that continue to block access for diverse founders, limiting the potential of innovative businesses that struggle to secure investment.
Shattering this "triple glass ceiling" is not just about diversity metrics—it’s about ensuring that fintech innovations aren’t built on the same systemic inequalities that traditional finance has struggled with.
To address these disparities, fintech companies can implement targeted strategies to create a more inclusive industry:
Bias-Free Recruitment – AI-driven tools can anonymize applications and standardize evaluations to reduce unconscious bias in hiring and funding decisions.
Inclusive Leadership Development – Fintechs can actively support women and underrepresented founders by increasing funding access and visibility.
Targeted Mentorship & Networks – Programs focused on supporting female and minority entrepreneurs can break down systemic barriers by providing access to capital and advisory support.
The "triple glass ceiling" is a significant challenge, but fintech has the opportunity to reshape financial inclusion from the ground up—ensuring that access to funding is based on potential, not outdated biases.
Fintech has the tools, technology, and momentum to create a more inclusive financial system, but it must act with purpose to break time-honored barriers. AI-driven credit models, embedded finance, and women-inclusive funding strategies can close financial gaps, but only if fintechs consciously prioritise inclusion over convenience.
Regulators are demanding greater lending transparency, but fintech start-ups and challenger banks are leading the charge to challenge credit availability. Nevertheless, the "triple glass ceiling" for fintech investment remains a major threat. If the industry fails to focus on diverse founders, it risks repeating the same systemic biases the old finance industry has struggled with.
The future potential is clear: develop fintech products that serve more than the financially wealthy. Companies that embed inclusion into their products, talent acquisition, and investment strategies will not only enable better financial outcomes for underserved communities, but also access vast, untapped markets.
What’s the biggest challenge fintechs face in making financial services more inclusive? Join the conversation.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Katherine Chan CEO at Juice
20 hours
Anoop Melethil Head of Marketing at Maveric Systems
20 February
Ivan Aleksandrov CSO | Core banking, BaaS, Fintech Advisory at Advapay
18 February
Scott Dawson CEO at DECTA
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