Having a bank account is a crucial element of fostering both financial literacy and inclusion. However, opening a child bank account requires a parent to have a form of ID - either a drivers licence or passport and three months of recent utility bills. A significant proportion of adults living in poverty so often do not have bank accounts and pay for utilities via expensive prepay meters and, as such, don't receive utility bills. These people not only miss out on direct debit discounts and incur extra costs on prepay meters, but they also may not have enough money to pay for ID documents. The absence of documentation precludes them from opening a bank account either or themselves or their children and exposes them to paying a 'poverty premium.'
The Poverty Premium comprises several areas in which people in poverty pay extra to access goods or services.
TrustElevate's KYC product removes the reliance on utility bills and ID documentation so that parents can open bank accounts for their children online. Having a bank account enables financial inclusion and foster financial literacy, which refers to financial awareness, knowledge, skills, attitude and behaviour required to make sound financial decisions and achieve individual financial well-being. Better financial literacy enables people to access, effectively use and derive maximum benefit from financial services. Understanding how to make financially responsible decisions and managing one's credit and debt are skills that are essential to our daily lives, without which people are vulnerable to financial predators and poor choices. Financial literacy is critical to avoid high levels of debt, excess fees for financial products, accessing credit and saving for retirement.