At the core of Equifax’s purpose is helping people live their best life financially. That’s why we’re constantly innovating our solutions to promote greater financial inclusion and empower consumers to take charge of their financial lives.
Recently, our very own David Stiffler, President of the Equifax Foundation and our Corporate Social Responsibility (CSR) leader, sat down with Orlando Zayas, CEO of Katapult for Authority Magazine, who is working on a series on companies promoting financial inclusion. Together, Stiffler and Zayas delve into the principles of financial inclusion and how Equifax strives to support unbanked and unbanked consumers.
Here is an excerpt from the interview:
Zayas: What exactly is Financial Inclusion?
stiffer: The World Bank defines financial inclusion as access to useful and affordable credit products/services that meet a person’s needs and are delivered in a safe/responsible manner. Financial inclusion is about ensuring that everyone has access to basic financial services, regardless of income or socioeconomic status. I would point more specifically to exclusion, especially in the United States, where exclusion has decreased and continues to decrease along racial lines and has meant exclusion from credit, banking, housing, and insurance.
Zayas: What does it mean to be “unbanked”?
stiffer: The “unbanked” people are those who do not use traditional financial services, such as credit cards and bank accounts; instead, they rely on alternative financial services, such as check cashing services, money orders, and payday loans, which are often expensive.
Zayas: For the benefit of our readers, can you explain some of the typical reasons a person might be unbanked? Why can’t they just walk into the local bank and open an account? Why can’t they just open an account online?
stiffer: There are many reasons a person may be unbanked: lack of access, unemployment, minimum balance requirements, mistrust of financial institutions, lack of stable income, inability to meet minimum daily balances, etc.
Some unbanked consumers simply don’t have access to nearby bank branches in their communities (as many have closed), or banks have limited hours for those consumers who work multiple shifts.
There are excellent online banking options, but many do not have adequate or reliable access to the Internet. So if someone doesn’t have constant access to the internet, that presents a challenge. And it can also be challenging to do business with an online-only bank.
There are a handful of rising challengers or neo-banks out there. Killer Mike and his team made waves when they announced Greenwood Bank a few years ago, but at Equifax, we’re proud to partner with Mobility Capital Finance (MoCaFi) that is working to put consumers and entire communities on secure access to banking services and on a stronger path to financial security and resiliency.
Zayas: This may be obvious to you, but it will be helpful to explain it in detail. Can you articulate to our readers some reasons why it is so important for companies to promote financial inclusion?
stiffer: Big question! Many reasons come to mind, but a few that resonate with me are that employees and consumers are demanding more from their preferred employers and brands, especially when it comes to those employers’ and brands’ commitments to equity-related issues. and financial inclusion. Furthermore, exclusion, in purely commercial terms, is bad for business. Greater financial inclusion means bigger markets! If you had asked me this question a decade ago, I would have said that it is the right thing for companies to do. But if we think along the lines of stakeholder capitalism, there is every reason to believe that we can build a more inclusive economy that is fair and profitable.
Removing barriers to financial inclusion is not something that financial institutions can do unilaterally. To be successful, the effort must involve the entire ecosystem working together. Because financial security remains a major hurdle for many, it is imperative that financial institutions, businesses, communities, and policymakers work together, rethink traditional models, and enable access to credit and financial inclusion in innovative ways.
To read David Stiffler’s full interview, click here.