A new report by six US trade groups has underlined the obstacles and solutions for boosting financial inclusion and access across the US.
The report – titled Delivering Financial Products and Services to the Unbanked and Underbanked in the United States – Challenges and Opportunities – was put together by The Clearing House (TCH), the American Bankers Association, the Consumer Bankers Association, the Credit Union National Association (CUNA), the Mid-Sized Bank Coalition of America, and the National Bankers Association.
Currently, 6% of US households are unbanked. According to TCH, the paper identifies the key reasons for individuals being unbanked or underbanked and highlights existing actions from banks, non-profits, credit unions and policymakers that have ‘shown promise’ in addressing this challenge.
The report came to the conclusion that instead of creating a large and potentially expensive banking infrastructure to create bank accounts through the Federal Reserve or the US Postal Service – there would be more cost-effective and efficient ways to help those in need.
Examples of other ways included verifiable identification, a system unavailable to many underbanked/unbanked people. The report claimed policy makers should tackle this obstacle as well all other factors private sector players cannot address. The encouragement to open new bank accounts was also included, as well public-private partnerships to expand financial education on opening bank accounts.
The expansion of broadband access was additionally cited as a way to tackle financial exclusion, as well as continuing programs that have proven to be successful in getting more people involved with their bank accounts.
The report also included the continued examination of unbanked trends as a way to tackle the issue, claiming public policymakers should examine the factors that contributed to the sharp decline in the unbanked rate for Black and Hispanic households across 2015 to 2019. In addition, it stated policymakers should look at the underlying reasons for continued observed racial disparities in finance.
TCH deputy general counsel Rob Hunter said, “Financial inclusion and access to bank accounts and services is a key priority of banks and credit unions and an important shared goal of the private, non-profit, and government sectors. While there is much more work to be done, we are pleased that the percentage of unbanked US households has steadily declined over the past decade. The recommendations set forth in the paper are aimed at expanding that progress.”
CUNA chief advocacy officer Ryan Donovan added, “This research underscores how important it is to remove barriers to financial access for the unbanked and underserved. For over 100 years, America’s credit unions have promoted thrift and provided access to credit for provident purposes. We look forward to working with policymakers to apply these findings and explore meaningful solutions that improve financial well-being for everyone.”
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