At the core of Equifax’s purpose is to help people be their financial best. That’s why we’re constantly evolving our solutions to promote greater financial inclusion and empower consumers to take charge of their financial lives.
Recently, our own David Stiffler, President of the Equifax Foundation and our Head of Corporate Social Responsibility (CSR), caught up with Orlando Zayas, CEO of Katapult, for Authority Magazine, who is working on a series on companies promoting financial inclusion . Together, Stiffler and Zayas dive deep into the principles of financial inclusion and how Equifax strives to support unbanked and unbanked consumers.
Here is an excerpt from the interview:
Zaya’s: What exactly is financial inclusion?
Stiffler: The World Bank defines financial inclusion as access to useful and affordable credit products/services that meet individuals’ needs and are provided in a safe/responsible manner. Financial inclusion is about ensuring that everyone, regardless of income or socio-economic status, has access to basic financial services. I want to draw particular attention to exclusion, particularly in America, where exclusion has declined and continues to decline along racial lines and means exclusion from credit, banking, housing and insurance.
Zaya’s: What does it mean to be unbanked?
Stiffler: The unbanked are those who don’t use traditional financial services like credit cards and bank accounts; Instead, they rely on alternative financial services like check cashing, money orders, and payday loans, which are often expensive.
Zaya’s: For our readers, can you explain some of the typical reasons a person might not have a bank account? Why can’t they just go to the local bank and open an account? Why can’t they just open an account online?
Stiffler: There are many reasons why a person does not have a bank account: lack of access, unemployment, minimum balance requirements, distrust of financial institutions, lack of regular income, inability to raise minimum daily balance, etc.
Some unbanked consumers simply do not have access to nearby bank branches in their communities (since many have closed), or the banks have restricted opening hours for consumers who work multiple shifts.
There are some great online banking options, but many don’t have adequate or reliable access to the internet. So when someone doesn’t have 24/7 access to the internet, that presents a challenge. And doing business with an online-only bank can also be difficult.
There are a handful of challengers, or neo-banks, that are on the rise. Killer Mike and his team made waves when they announced Greenwood Bank a few years ago, but at Equifax we’re proud partners of mobility capital funding (MoCaFi), dedicated to bringing consumers and entire communities to safe banks and onto a stronger path to financial security and resilience.
Zaya’s: This may be obvious to you, but spelling this out will help. Can you give our readers some reasons why it is so important for companies to promote financial inclusion?
Stiffler: Great question! There are so many reasons I can think of, but a few that resonate with me are that workers and consumers are asking more of their employers and brands of choice, particularly around those employers’ and brands’ commitment to equity and financial inclusion. Besides, in purely business terms, exclusion is bad for business. Greater financial inclusion means bigger markets! If you’d asked me that question a decade ago, I’d have said this is the go-to for business. But if we think in terms of stakeholder capitalism, there is every reason to believe that we can build a more inclusive economy that is just and profitable.
Removing barriers to financial inclusion is not something financial institutions can do unilaterally. To be successful, the entire ecosystem must work together. With financial security remaining a significant barrier for far too many, it is imperative that financial institutions, businesses, communities and policymakers work together to rethink traditional models and innovate to enable access to credit and financial inclusion.
Click here to read the full interview with David Stiffler here.