What is the best way to help struggling Americans?
This month I was privileged to attend two conferences devoted to helping the struggling: the Clinton Global Initiative in Chicago and the Center for Financial Services Innovation's Underbanked Forum in San Francisco. Both events had tracks focused on increasing availability of affordable banking and payment services to the entire U.S. population. Internet and mobile technologies were a big part of the discussions as a means of closing some ground between the high-fee check cashers that service poorer constituents and big banks that shun them.
Plenty of interesting financial inclusion initiatives exist. Self-help websites like SavvyMoney let people evaluate how much their credit score would improve if they reduced credit card or loan balances. Kiosks like those offered by Nexxo let supermarkets and other small businesses offer underbanked customers services like check-cashing, bill paying and more. For contractors, caregivers and other roaming workers with little time to spare, prepaid accounts like iBankUP let them manage their money entirely through low-cost mobile phones. [I am the CEO of Plastyc, which provides iBankUP.]
But during both dialogues, we discussed an important practical matter: how do the underbanked hear about these services?
The first issue is access. Many people don't hear about new, better options outside of the mainstream banks and they don't have the time or inclination to do heavy research on the web. In contrast, check-cashers and payday lenders are strategically located in hard-hit neighborhoods. It is difficult to miss them.
Another issue is trust. How can people know that a seemingly great new service from an unknown company is trustworthy? To build a sense of trust, several financial service providers that target the underbanked turn to celebrities. But as the ill-fated Kardashian Card -- which ceased shortly after launching due to public outcry about high fees -- demonstrates, celebrity endorsements don't ensure fair, quality service.
Which trustworthy organizations are strategically located in their communities and have the goal of helping, not exploiting, their constituents? Credit unions come to mind, but they often are lacking a consistent presence in lower-income neighborhoods.
So how about houses of worship? Most are truly community-based organizations. Many offer a broad base of support, including food pantries, counseling and help accessing social services. Why not extend that support by helping to address another one of the problems their community faces: financial inclusion?
Faith-based organizations without sophisticated websites and email lists could access the same material and hold small workshops during non-service hours.
Either way, faith-based organizations should steer clear from specific commercial products and only discuss product categories and general principles.
And they will need help in getting objective information. A Clinton Global Initiative attendee last month floated the idea of a CGI-branded "stamp of approval" for companies offering financial products, services and information that is high quality and trustworthy. It seems like a good idea to me.
I am a businessman. And I don't believe it's always a good idea to mix God and money. But in this case, done right, it might make sense as a step toward financial inclusion.
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