April is National Financial Capability Month, which serves as a time for the financial services industry to reflect on ways to decrease the barriers to admission to the financial system. But financial inclusion means more than simply providing access to banking and payments services; it also incorporates education, economic development, and financial stability for unbanked or underbanked customers, small businesses, and financial institutions.
To help address disparity in financial services, NEACH has been engaged in initiatives at the national level that help bridge this gap and extend financial services to the underserved.
For example, as a founding member of the U.S. Faster Payments Council (FPC), NEACH staff serve on the Council’s Financial Inclusion Work Group, which was created to “provide a blueprint for leveraging faster payments to accelerate access to the financial system for unbanked and underserved Americans.” NEACH staff also joined Nacha’s Consumer Financial Exploitation Project Team, which “creates educational materials, resources and tools to enable the industry to fight financial fraud.”
NEACH’s Education Director, Mary Mumper-Morrison, ​​​​AAP, APRP, CAMS—a participant in these national groups—feels strongly that access to financial services is not a luxury—it’s a fundamental right.
“There are people out there who live paycheck to paycheck, with little-to-no financial cushion. They don’t have the means, connections, or relationships to get a card or a loan. They get payday loans or go to check cashers and pay a bunch of money just to cash their check,” she said.
Before coming to NEACH, Mumper-Morrison worked at a FinTech that opened checking accounts for anyone who was affiliated with the colleges and universities they worked with; although they worked with established know your customer (KYC) methods, no credit check was needed. It was eye-opening, she explained. “We had customers who might not have been able to have a checking account elsewhere.” It is possible, she continued, for a customer to have a checking account that isn’t loaded with fees, processes, and paperwork—but that still maintains compliance standards.
Driving national initiatives
That history explains why Mumper-Morrison chose to engage with the FPC’s Financial Literacy Work Group, which has been addressing pain points for years. For instance, in 2022, the group issued a financial inclusion report that led to outreach to the environmental, social, and governance (ESG) community about how financial inclusion contributes to ESG and reaches a broader audience. They also published a white paper on cross-border bill payment, in conjunction with the FPC’s Cross-Border Work Group. And currently, the Work Group is preparing to share results from an FPC survey that sought to establish where its members are with financial inclusion and the issues that need to be addressed.
Mumper-Morrison emphasized that financial inclusion has been a strong emphasis of the FPC’s precisely because its members see the benefits of faster payments for supporting these needs. In fact, at the 2022 FPC Spring Member Meeting someone from the office of the mayor of New Orleans joined the group to discuss a card they were developing that would provide access to city services, as well as to disaster relief and other disbursements. If someone doesn’t have a bank account, you can’t get funds to them, and you can’t mail a check to an address that’s underwater. But a card, which allows funds to flow to and from it, can mean the difference between someone eating or not, she said. And instant and real-time payments have a role to play in better supporting those types of immediate payment needs.
But the need extends beyond just working through the right infrastructure. Mumper-Morrison pointed to FPC’s Fall 2022 Member meeting, where a Native American group spoke about financial inclusion on a reservation, or in very rural areas, where the closest bank is 50 miles away. It raised questions like if your parents never had a bank account, how do you learn to balance a checkbook? Education is a crucial part of financial inclusion, Mumper-Morrison stressed. “How helpful is an account without the information about how to use it?”
Managing risk for inclusion
Of course, risk management remains a chief consideration for FIs in these instances—often these accounts are greater risk—but it’s important to include people who aren’t currently included in the financial system. FIs can approach their customer base and provide inclusive services; examples might include a prepaid card with low fees, or a stronger focus on financial education, or offering ways to process payments that aren’t necessarily associated with an account, or a card that’s an ATM card but not a debit card. Options like these could allow the underbanked to get a foothold in the financial system, helping empower them to succeed financially.
Making the national local
Overall, by participating in national efforts around financial inclusion, NEACH helps to resolve key issues in today’s financial landscape and also brings back learning and leadership in return. “Because we seek input from our members, we can add their pain points and their concerns to these conversations, so they are represented. We also bring findings back, which translates into action—resources such as educational materials or new collaborative programs to support our members.”
By working to develop accessible, efficient, and secure payment systems, NEACH and its members play a crucial role in bridging the gap between FIs and the customers who have traditionally been left behind. It’s a role the organization relishes and one it plans to continue at the national level.