It’s Time for a National Financial Inclusion Strategy

Nearly one in five Americans remains unbanked or underbanked. The cost of this exclusion is staggering, with these Americans shouldering a disproportionate share of the billions spent on fees and interest.

That's why we strongly support the Department of the Treasury’s moves to create a national financial inclusion strategy. In a new comment letter, we outlined policy recommendations to harness the power of technology to expand access to financial services for all Americans.

Those recommendations include modernizing the national payments system to enable direct participation by payment companies, supporting bank-fintech partnerships that advance financial access, modernizing chartering and licensing to increase competition,  finalizing open banking, supporting responsible AI/ML adoption, and much more.

Read excerpts from our comment letter here for the fintech industry’s recommendations to advance financial inclusion:

“We applaud the Treasury Department’s commitment to promoting financial inclusion through policy because we agree that all Americans should have access to transparent, affordable, and responsible financial tools. Financial technology is essential to making the vision of increasing access, inclusion, and opportunity a reality. This progress is already occurring on a global scale. Many countries are making substantial policy investments in their fintech sectors, including efforts to expand access to national payment systems for well-regulated payment companies to foster competition with legacy providers.

“Now is the time to advance a proactive, coordinated, and comprehensive policy agenda to close the gaps in access to financial services. We stand ready to inform the Treasury Department’s efforts to develop a national strategy for financial inclusion and bring us closer to a future of finance that works for all. This comment letter details the fintech industry’s recommendations to advance financial inclusion and shape the future of financial services by embracing responsible innovation.

“Our comments address the RFI by detailing the following key takeaways and recommendations:

• First, Treasury should revisit and clarify the definition of financial inclusion, recognizing that accessible, responsible, affordable, and timely fintech financial products and services solve many of the challenges previously associated with being underbanked.
• Second, existing shortcomings of the legacy financial system continue to challenge, hinder access, and create inefficiencies for consumers and small businesses.
• Third, by leveraging modern technologies to increase efficiency, enhance transparency, reduce costs, and empower consumers and small businesses, fintech is a powerful solution to existing shortcomings in the legacy financial system.
• Fourth, despite progress, policy-related challenges remain and impede further technology development that would increase financial access and inclusion.

“Finally, a comprehensive national financial inclusion strategy can improve consumer and small business financial access and opportunity by pursuing the following policy and regulatory initiatives:

1. Modernize the national payments system by enabling direct participation by well-regulated payment companies.
2. Support bank-fintech partnerships that advance secure financial access and industry competition.
3. Increase banking competition and diversification by modernizing the chartering and licensure of technology-driven financial services providers.
4. Establish digital ID standards and modernize KYC/AML requirements in order to reduce friction and help bring more people into the financial system.
5. Finalize Dodd Frank Section 1033 and permit consumer-centric secondary use of permissioned data.
6. Ensure model developer access to national representative datasets in order to improve fairness and accuracy.
7. Support and facilitate responsible AI/ML adoption, which can improve financial services outcomes and compliance across a range of activities.
8. Expand the accredited investor definition to broaden access to wealth creation opportunities.
9. Support Secure 2.0 implementation and technology-based solutions.
10. Expand non-bank participation in SBA programs to better serve historically disadvantaged small businesses.
11. Incentivize MDI, CDFI, and community bank fintech partnerships to expand their access, competitiveness, and reach.
12. Ensure financial regulators have the tools, knowledge, and human capital to keep pace with the rapidly developing financial services landscape.
13. Develop a regulatory framework that safeguards workers’ access to EWA products, fostering innovation and reducing reliance on high-cost credit options.
14. Continue the use of the IRS IVES program for consumers and small businesses.”

Learn more here about the Financial Technology Association's work to shape the future of financial services through responsible innovation.