Dec 11 2015 Expanding financial inclusion in the United States requires commitment from across sectors
While financial inclusion presents a significant global challenge — the Federal Deposit Insurance Corporation estimates that 47 percent of adults in developing countries are “unbanked” — it is also an issue here at home, with 20 percent of black households and 18 percent of Hispanic households lacking access to financial services. In an article in Tech Crunch earlier this year, Matt Homer, the leader of the U.S. Agency for International Development (USAID)’s financial inclusion investments in India, called for the United States to take lessons on financial inclusion from the developing world. “The U.S. … lacks a national financial inclusion strategy, which many countries are now putting in place,” he explained. “These strategies provide an opportunity to elevate financial inclusion as a nationwide priority and develop a coordinated approach between government agencies, independent regulators, and the private sector.” Earlier this month, the Treasury Department and USAID hosted a two-day financial inclusion forum, marking a step toward this type of coordinated strategy to address this issue both at home and abroad.
Financial inclusion and expanding access to banking services are not always what come to mind when considering how to help individuals in poor, rural areas in the United States. But a lack of access to financial services is linked to other critical issues like poverty and hunger, and credit scores continue to influence not only a citizen’s ability to receive a loan, but also obtain employment. As a recent article in The New York Times points out, across the country “millions do not have enough financial history — despite years of paying rent and bills — to have the credit score needed for access to loans,” which can affect their access to education or ability to buy a house. At the forum, Secretary of Treasury Jacob Lew also called for more attention to efforts to boost Americans’ retirement and rainy-day savings.
“These strategies provide an opportunity to elevate financial inclusion as a nationwide priority and develop a coordinated approach between government agencies, independent regulators, and the private sector.”
By bringing together government, financial industry, non-profit, and academic partners, the U.S. government is proving its commitment to providing essential services like access to credit and checking or savings accounts to the areas of our nation that need them the most. The intersector partners who gathered at the forum exchanged views and ideas on financial inclusion, but they also committed to take action, resulting in the formation of 10 new initiatives. These include:
- A $1 million contribution from Coca-Cola to Operation HOPE to provide financial education to women and girls in the southeastern United States.
- The launch of the Catalyst fund by JPMorgan Chase and the Gates Foundation, with involvement from Accion, Grey Ghost, and the Omidyar Network, to “improve technology-based financial inclusion products” and generate “insights on innovations in financial services for low-income households to share in the United States and other markets.”
- A partnership between the Department of Housing and Urban Development, Experian, FICO, LexisNexis, the Policy and Economic Research Council, and TransUnion that will “evaluate the impact of reporting rental payment history on the credit scores of subsidized housing residents and the general population.”
Financial inclusion is a complicated issue that will require the dedication and cooperation of diverse stakeholders. “As a global issue that cuts across nations of all types,” Homer explains, “we can best tackle this challenge if we can find ways to learn from each other.”