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Our Financial Services System in 2024: Inclusion for All

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Most of us are all too familiar with the toll that the financial crisis has taken in terms of foreclosures and lingering unemployment. But many of us are less familiar with what are some astonishing statistics that illustrate the toll that financial instability and the closure of hundreds of bank branches have taken on too many American families. For example:

- Nearly 70 million Americans are financially underserved -- meaning that they rely on high-priced alternative financial providers such as check cashers and payday lenders.
- These underbanked individuals spent $89 billion on interest and fees in 2012.
- Americans with annual incomes of $20,000 will spend an average of $1200 a year on check-cashing fees and money orders each year.
- Low-income individuals will spend $40,000 during their lifetimes on unnecessary fees.

These statistics, and the stories of hard-working Americans whose economic struggles are intensified by lack of access to affordable financial services, are brought to life in Spent: Looking for Change, a new documentary screened at the Aspen Ideas Festival this past weekend. The individuals profiled were working full-time, either in a wage job or their own businesses. But despite their labor, something -- high levels of student debt, the illness of a family member, or misuse of credit at an early age -- had rendered them unable to access financial services through traditional channels. As a result, they had turned to high-priced alternatives that further threatened their financial stability, and their futures.


In FIELD's work with microenterprise development organizations across the country, we have heard and seen similar examples from entrepreneurs working to start or grow their businesses. Too often, these small business owners lack the credit scores needed to access reasonably-priced credit, or savings or a credit card to help them weather the ebbs and flows of a new or growing enterprise. In fact, for the past three years, we've been engaged in the Asset Building through Credit (ABC) program, in which we've worked with microenterprise organizations to help them to offer a secured credit card to entrepreneurs, as a way to help build their credit.

There are solutions to the challenge of financial inclusion. In a discussion following the Festival's screening of Spent, Dan Schulman of American Express -- which sponsored the film -- noted that technology-based platforms that enable individuals to move cash or pay bills can dramatically reduce the cost of providing financial services. And Bill Bynum, CEO of Hope Enterprises and winner of the Aspen Institute's John P. McNulty Prize, described how his HOPE Credit Union has expanded by opening branches in rural communities where banks have closed. HOPE is raising capital now to expand its growth. Solving this problem will not be easy -- we need regulatory changes that can prevent abusive practices, and to deploy capital and technology in new ways -- but it can be done. The Ideas Festival theme this year was all about looking forward and "imagining 2024". In 2024, we can have a financial system that supports all Americans as they work to build their futures.