We get it – financial inclusion is a popular subject to talk about these days. Then again, there is good reason for it.
There remain plenty of gaps that still exist when we’re talking about financial inclusion in our nation’s communities, and they can be subtle. Sometimes it seems like just by bringing it up in conversation or write about financial inclusion will suddenly inform everyone about joining a credit union. Unfortunately, just talking about it doesn’t solve the problem.
Credit unions uniquely positioned to drive financial inclusion
The world today finds itself at a critical juncture. As economic growth has greatly reduced global poverty rates, ubiquitous, affordable, and connected financial technology can substantially lower financial exclusion rates. Now, it’s up to the credit union movement to take practical, results-oriented action to make it happen. The structure and financial services that can help lower-income consumers are available; it’s simply a matter of addressing the challenge and partnering with the available fintech to solve it.
The credit union structure – by its very design – is one-of-one when fostering financial inclusion. Cooperatives’ very mission centers on placing members top-of-mind by prioritizing personalized, bounteous service. The mantra of “people helping people” in the credit union movement remains an inherent lifeline to underserved members and consumers, but we can’t simply shout it out. We must take actionable, practical steps in order for those financial solutions to be realized on behalf of the underserved who suddenly find themselves in need or have been in need for some time. If credit unions don’t act and act fast, they could lose prospective members as digital banking adoption increases with the competition.
For credit unions to continue to challenge and compete in order to support their communities and neighborhoods, it is imperative to prioritize financial inclusion measures. ATMs, artificial intelligence, and mobile platforms like the QCash Life Event Lending can provide significant leverage for offering the latest in-demand offerings members and consumers require in 2022 and forward.
Those offerings have the potential to stabilize credit unions’ place in their immediate communities, but they can also lower fees and interest rates, enhance economic growth in those regions, and allow cooperatives to swell and diversify their membership.
Credit unions remain the source for enhancing financial inclusion for members. The opportunity to make it happen for every member, everywhere, is enormous, and the fintech is fully available. Here are some practical actions credit unions can perform to amplify financial inclusion:
Highlight prepaid financial products
According to a Financial Deposit Insurance Corporation household survey in 2019, 8.5 percent of U.S. households used prepaid cards, down from 9.7 percent in 2017, and 10.2 percent in 2015. Those numbers need to go back up. Using prepaid credit or debit cards offer a safe and secure path to credit histories, which have the potential to solve many challenges to securing and accessing healthy mainstream financial services.
Discover new and updated methods to evaluate members’ credit quality
AI is now an invaluable asset to use in evaluating and analyzing credit union members’ creditworthiness. For instance, QCash’s patented AI finds and considers near-unlimited indicators to assess whether a member is likely to pay back that individual loan amount. With a strong focus on identifying individuals who may not qualify for a small dollar loan under traditional underwriting indicators like a FICO score, they remain good quality risks. The fact is we are in a new era where traditional financial institutions need to take immediate action to identify contemporary financial tools and services that can provide greater access to financial inclusion and health than one-dimensional credit scores.
Give members reasons to adopt mobile banking
Piggybacking a little off the last entry, Pew Research has found that lower-income consumers are more likely to have a mobile connection rather than even home internet. Provide your members a cooperative environment that incorporates mobile banking and easily-accessible financial products and services that appeal to the underserved. Such fintech adoption will reduce financial exclusion in credit union communities.
Remove the barriers to financial inclusion
Many of the barriers that obstruct access to financial inclusion for lower-income members include overdraft fees, minimum balance fees, and general service fees. In fact, according to the World Bank, the dominant reason the underserved say they lack a bank account is the simple lack of money. Punishing them financially only exacerbates their financial inclusion and economic health problems.
Develop more access points for digital banking services
ATMs are evolving into more than basic outposts for taking out money. They are morphing into diversified access points for digital financial services. They are beginning to be manufactured more like enlarged smartphones, and communities and neighborhoods absent robust branch locations – aka banking deserts – now have a new form of credit union engagement that is more accessible and cost-effective. It also addresses one of the key issues inhibiting underserved members and consumers – transportation to their nearest financial institution.
The credit union movement is finding itself in a remarkable position to break down financial barriers to provide updated, contemporary financial support to the underserved in our nation’s communities. By promoting further access to financial technology, greater acceptance and new ways of thinking from within the financial system, and a stronger, more equitable market for financial products and services, credit unions are in the driver’s seat in our continuing mission to improve members’ financial lives and usher in a new, more financially-inclusive era that benefits America’s households.