That message should be trumpeted often, and for good reason. Financial inclusion is a practical and effective strategy in the financial services industry, however we have a long way to go. Many gaps still remain when it comes to enhancing financial inclusion for communities. According to Findex, approximately 1.7 billion adults around the world remain unbanked.
Just as economic growth has reduced global poverty rates, however, affordable and connected financial technology has the potential to dramatically reduce rates of the underserved, despite the economic challenges confronting us. At this point in 2022, it’s up to the credit union industry to take the necessary and innovative steps to make that happen. For many cooperatives, it’s a matter of thinking differently about the challenge, and then onboarding the appropriate solutions to address those product or service issues.
The legislative fight for financial inclusion
Truhart also acknowledged CUNA’s wholehearted support of the draft legislation in support of the Expanding Financial Access for Underserved Communities Act, which allows federal credit unions to add underserved areas to their field of membership. It would also expand the definition of a low-income credit union to include any area that is more than 10 miles from the nearest branch of a financial institution.
“CUNA works tirelessly to ensure policymakers know that as a not-for-profit, member-owned financial cooperatives are laser-focused on advancing financial inclusion and equity in the communities we serve,” says Truhart. “CUNA proudly supported efforts to increase funding for Community Development Financial Institutions (CDFIs) and Minority Depository institutions (MDIs), eliminate barriers for the LGBTQ+ community, and ensure women and minority-owned businesses have access to capital without being squeezed by regulatory red tape.”
She continues: “Credit unions’ outdated field of membership restrictions…shut out those who most need access to mainstream financial services. At this pivotal time, when our nation must face the reality that the pandemic has disproportionately affected underserved and communities of color, CUNA strongly believes this legislation takes significant steps forward in addressing financial inclusion for all Americans.”
Credit unions’ place in driving financial inclusion
Credit unions are, collectively and individually, perfectly positioned to steer how the financial services industry can cultivate ever-improving financial inclusion tools, processes, and financial health results for their communities.
In 2022, however, credit unions have to start taking urgent action. As cooperatives drag their feet, they take the risk of losing potential members as big banks with unlimited budgets continuously work to draw them away. For credit unions to hold their own and take care of their communities, financial inclusion has to be front and center. Leveraging existing technologies like ATMs with artificial intelligence, digital apps, and other forward-thinking fintech partnerships can help drive the movement forward.
Credit unions can put themselves in the driver’s seat in spreading the message of financial inclusion. The tech is fully available, and the opportunity is there.
Credit Union Times offers these steps credit unions can take to amplify financial inclusion in their communities:
- Remove barriers to access
You wonder why many underserved or low-income members are shut out of the system; minimum fee balances, courtesy and service fees represent a big barrier. According to the World Bank, the simple lack of funds remains a primary reason for the unbanked.
- Make mobile banking an incentive
Lower-income consumers are more likely to have a mobile device or connection rather than home internet, according to the World Bank. Tailoring mobile financial services and digital banking for the underbanked will increase and inspire financial inclusion!
- Broaden access points to advanced digital services
The days of ATMs simply spitting out the Benjamins are over, as they are programmed to start behaving more like smartphones. Regions that don’t possess robust banking sectors are suddenly realizing an entirely new form of branch location that is much more accessible but without the budgetary investment. This development speaks directly to one of the primary issues with the underbanked – transportation to an individual credit union location itself.
- Experiencing new products to determine creditworthiness
Many financial institutions are employing artificial intelligence (AI) to determine more accurate credit scoring systems by speaking directly to your core processor to complete every step of the loan, from start to finish. For instance, QCash’s Life Event Loan platform uses our proven, proprietary relational decisioning engine to examine the member relationship through behavioral data rather than using conventional credit scoring systems. This allows your credit union to say “Yes” more often and serve more members.
Credit unions have a distinct opportunity to break through today’s financial barriers and offer smaller communities greater access to financial support services.
By encouraging improved access to fintech partnerships, greater openings into the mainstream financial system, and improved fairness and equity in the financial product marketplace, credit unions can improve members’ lives and reinvigorate a generational opportunity that will fundamentally benefit members and cooperatives alike while contributing to improved overall economic growth.
Watch QCash’s recent joint webinar, hosted by CSS!
Coopera, Inclusiv, and QCash are working together to help credit unions fully embrace financial inclusion as an engine of growth and relevance. Each organization brings a unique perspective and set of tools to the table, but our core beliefs are simple and the same: credit unions are here to help low- to moderate-income people and communities achieve financial stability and independence.
In continuing that mission, we invite you to re-watch our recent joint webinar “Lending Deeper: Loan Products That Work for Everyone” hosted by CUNA Strategic Services that streamed June 23 at 10 am PT, 1 pm ET. The webinar featured national credit union industry figures Victor Corro, CEO of Coopera, Pablo DeFilippi, Executive Vice President of Inclusiv, and our own QCash CEO, Seth Brickman.