A Plan to Increase Financial Access with New Technology
By Bob Annibale, Global Director, Citi Community Development and Citi Microfinance October 01, 2014 02:17 PM
Technology has increased access to education, healthcare, and instant communication. But it has yet to revolutionize access to financial services for low-income communities. Having adequate financial access not only impacts the economic potential of individuals, but also has an effect on the broader economy.
Without access to appropriate tools and guidance, people face more difficulties when it comes to developing good credit, saving money, and building a secure financial future. Without such building blocks for economic growth, it is more challenging to buy a home, build a business, or send a child to college.
This trend also allows costly and predatory alternative financial services, which target African Americans and Hispanics in particular, to thrive. That is why we need simple and responsible products that leverage technology to bring more people into the financial sector, and Citi Microfinance and Community Development are taking steps to change that.
It takes partnerships to achieve results - and financial institutions, the public sector and community organizations are now working together to deploy programs across the country. In Florida, we are working with the nonprofit organization Catalyst Miami on a program we can replicate across the country.
This initiative - called Ways 2 Wealth - will uniquely enable Catalyst Miami's client to apply for a savings account online through a web portal, saving time and empowering them to put financial advice immediately into action. It seems simple, but by enabling low-income individuals to make fewer stops on their way to financial inclusion while working directly with their trusted nonprofit, we think it will have a meaningful impact.
In addition, the savings account will take deposits from ATMs in certain convenient stores, offering an easier solution than travelling to a bank, which could be far from one's home or place of work. Ways 2 Wealth participants will also attend trainings, engage in financial coaching sessions with Catalyst Miami, and set their own personal financial goals. Participants who successfully complete the program will receive incentives of up to $125 after six months.
Initiatives like this are critical in a state like Florida, which suffers from high rates of financial exclusion. The Federal Deposit Insurance Corporation reports that nearly 21 percent of Miami-Dade residents are under-banked. In addition, almost 50 percent of Florida households lack sufficient savings to cover basic needs during times of crisis, according to the Corporation for Enterprise Development. In Miami-Dade County, estimates push that figure up to 60 percent, well above the national rate.
Ways 2 Wealth is just one example of how the touch points for banking underserved populations must - and will - be different than touch points of the past, so that more people can access financial products for their economic stability. The more inclusive we make financial services, the more inclusive we make our communities, and the healthier our economies will be.