Reed Luhtanen, Executive Director, FPC
Last month’s Financial Literacy Month has put today’s economic environment in a new perspective. With inflation on the rise--prices rose 8.5 percent in March, compared to 2021, the biggest year-over-year gain since December 1981. The cost to borrow money is increasing. The average 30-year fixed mortgage rate hit 4.72 percent in March, more than a full percentage increase from March 2021. And with the pandemic waning, government aid is decreasing. So, many of the millions of primarily unbanked and underserved consumers, who greatly benefitted from the unemployment, rental assistance, stimulus payments, and other pandemic-related aid, will be required to find a way to do more with less, making financial acumen all the more critical.
And it’s why the FPC is committed to finding ways to support this at-risk consumer segment.
Recently, we explored this particular topic at our Spring Member Meeting. During a session titled Doing Well By Doing Good: Achieving Inclusive Economic Growth in New Orleans, we looked at how New Orleans is developing strategies and programs to tackle persistent economic challenges and ways in which faster payments can support economic growth.
As Joshua Cox, Office of Mayor LaToya Cantrell, New Orleans, stated during the session, “One of the major challenges is that a substantial portion of New Orleanians are unbanked or underbanked. And in order to be able to eventually build wealth and get to a place of economic sustainability, you can’t do it outside the financial system. So, our goal is to bring people into the financial system.”
Wole Coaxum with Mobility Capital Finance discussed ways in which the industry can get people into the banking system. “If we can get people to use payments in a crisis situation, if we can meet that immediate need, then you can make sure they have a high-quality product and then use that as a launchpad to bring them into the traditional banking fold and then use that to provide electronic tools to get them positioned for long-term goals like home ownership.”
That’s where FPC member organizations like Mastercard come into play. As was shared during the panel, Mastercard is helping build inclusive, sustainable cities through its City Possible ecosystem. Steve Tae of Mastercard noted that “COVID has only exacerbated and exposed an acute need for building more targeted and responsive digital infrastructure. Mastercard has been working with cities, like New Orleans and others, to launch programs around digital solutions, such as City Key, a payment card that can also allow access to buildings, such as recreation centers or other government buildings. By leveraging the reach and scale of public-private partnerships, we are helping cities unlock greater financial inclusion, community reach and engagement across a variety of segments.”
And faster payments can also help get us there. Coaxum emphasized, “If someone has the ability to say how they want their cash and get access to that money same day, next day, that is very powerful. That is the difference between someone being able to stay in their home and survive or being thrown off the economic train. Faster payments have the ability to change lives. If we can use speed as a way to reduce friction it puts us in a position to be able to strengthen vulnerable communities.”
Not only is the FPC studying these topics of inclusion and how to support the unbanked and underbanked, but we are actively working on industry tools and resources to help achieve results. Our latest initiative is a product of our Financial Inclusion Work Group. In the coming months, the Group will release its first deliverable, a white paper that will explore a holistic approach to advance financial inclusion and drive interest in the adoption of faster payments.
Because it all starts with financial literacy: education and understanding for consumers, including financial tools and resources, programs and products, and yes, ultimately, faster payments.
As such, the FPC will continue to examine the topics that advance and support our goal of a future of faster payments that benefit the entire ecosystem. If you’d like to be part of our endeavor, consider joining the FPC. Learn more at https://fasterpaymentscouncil.org/Why-Join-the-FPC.