April is Financial Literacy Month, when the nation is focused on spreading financial literacy education to help consumers understand how to better manage money. In a time when many Americans are still reeling from the financial impacts of the ongoing COVID-19 pandemic, supporting financial well-being for all consumers, especially the unbanked and underbanked, has never been more important.
During our Spring Conference earlier this month, we held a session called, “Faster Payments: Accelerating Financial Inclusion.” Adam Telem, Vice President, Product Management, Mastercard, who moderated the session underscored a key concept being addressed by the FPC. “It is really critical to think about how we, as an ecosystem, can come together and drive the right financial services for unserved and underserved consumers and small businesses.” With 106 million financially vulnerable Americans and many weakened small businesses as result of COVID-19, attendees felt the full weight of the statement.
“That’s why the [FPC’s] Financial Inclusion Work Group is so important,” Jay Collins, General Counsel and Corporate Development Officer, Ingo Money, Inc., one of the session’s four panelists, added. “There are so many avenues faster payments are in. Bringing together all of these different financial companies and different stakeholders into the Work Group will help highlight all the areas that we need to be working on to help financial inclusion take a step forward this year.”
The Financial Inclusion Work Group plans to create a blueprint for leveraging faster payments to accelerate access to the financial system for those unbanked and underserved Americans. The Group will work to showcase and explain how faster payments adoption is part of a holistic approach to advancing financial inclusion and mitigating some or all of the issues, concerns, and necessities of those most in need of financial services.
While it has a big task ahead of it, the discussion from the recent session provided some guideposts for initial efforts that will make the biggest impact. Panelists agreed that consumer protections, continued education, and efforts to upgrade legacy systems were of paramount importance.
“The idea of certainty that comes with a faster payment, which is a benefit in and of itself, also needs to come with robust protections,” said Christina Tetreault, Manager, Financial Policy, Consumer Reports, another participant in the session. “We are eager to see these products roll out solving problems, and coming with solutions to people and protections that inspire confidence and will drive greater use and adoption.”
In addition to protections, education is also critical. “Education is key in the space to let people know what is going on and how a payment is made and what protections are in place today or possibly in the future,” said Collins. “That is a big area you want to focus on when trying to bring consumers into the financial realm.”
“And there has to be an education of the value of being included in the banking system itself,” added Carlos Naudon, President & CEO, Ponce Bank. “Many underserved are being served with alternative banking means, which are arguably more expensive than they would be through the banking system. There are barriers that need to be overcome. But that is what we can address with education.”
And finally, there needs to be a continued focus on modernization. “There’s opportunity for us to take advantage of getting legacy processes and systems out of the ecosystem,” said Beverly Cole, Senior Director, Global Treasury, Walmart. “This can be focused on pretty quickly. These are steps that we can take now as we are trying to figure out the long journey. “
While I don’t think anyone would disagree that supporting financial inclusion is a long-term effort, the recent session at the Spring Conference underscored that point once again. There are many components to supporting the unbanked and underbanked – people, processes, systems – all of which have intricacies and nuances of their own. Now is the time to ensure their needs are met through the opportunities faster payments bring.
The FPC’s Financial Inclusion Work Group is open to additional participants. If you are interested in helping to support the financial well-being of the unbanked and underbanked through faster payments, consider joining the FPC. Learn more here.