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The following is an excerpt from an opinion editorial provided by Sandy Anderson, Experian’s executive vice president of the data office, operations, governance and privacy. Experian is a global data and technology company.
By News Desk
Amid some of the financial challenges that underserved communities experience, members across the financial services community remain committed to championing initiatives and programs that drive greater financial inclusion. In fact, collaboration has led to the inclusion of non-debt related payment information on consumers’ credit profiles, as well as digital services that make it easier to manage money. These efforts have helped to broaden access to fair and affordable financial resources for more individuals.
Some of the misconceptions and myths about the financial services community are hindering further advancement. Debunking these myths will build trust between the financial services community and consumers.
Myth #1: “Financial institutions have no interest in underserved consumers or credit invisibles.”
The truth is, banks and credit unions want to say “yes” to more prospective borrowers, including individuals and families from underserved communities. Beyond being the right thing to do, it’s an opportunity to potentially build lifelong relationships.
Myth #2: “There is a lack of trustworthy financial education resources.”
The financial services community and affiliated organizations recognize that empowering people with financial knowledge and skillset are critical to consumers’ financial success. In fact, banks and credit unions are partnering with nonprofits and non-governmental organizations to better understand the unique challenges and opportunities within specific communities and provide relevant tools and resources.
Myth #3: “Underserved communities have few opportunities to build credit and enter the mainstream financial system.”
People from underserved communities, as well as younger consumers and recent immigrants are often excluded from the mainstream financial system because they lack an extensive credit history. Historically, it’s created a vicious cycle; in order to get credit, you have to have credit.
Fortunately, there has been a sea change in innovative solutions to address the specific needs of these populations. These include new credit scoring models and microfinancing which provide financial services to individuals who may have been excluded from traditional banking systems.
More Inclusion, Fewer Myths
It’s encouraging that community organizations and banks are beginning to see the economic and social benefits of aligning on financial literacy and inclusion. As more initiatives come online, underserved populations will be able to establish a better financial foundation.
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