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Giving Compass' Take:
• Kassie Scott and Jorge González explain how fintech can people safe during the pandemic and how coaching can help low-income Americans successfully use this type of technology.
• What role can you play in increasing access to and use of fintech among marginalized populations?
• Read about leveraging fintech for financial health.
COVID-19 is increasing Americans’ reliance on financial technology (fintech), such as online and mobile banking. Stimulus payments alone doubled mobile banking registration. With banks closed or operating at reduced capacity, fintech provides some Americans with a safer alternative to traditional banking.
But the pandemic has made the digital divide—or the gap between people who have access to computers and the internet—even more apparent, especially for people with low incomes. Pew Research Center estimates more than 4 in 10 Americans with incomes below $30,000 a year do not have access to home broadband services or a traditional computer and instead rely on smartphones for internet access. Americans without access to online banking have had to wait hours in ATM lines and pay fees (PDF) to alternative service providers.
Accessing pandemic relief programs is harder for those outside of the financial system too. Roughly 35 million Americans have yet to receive the first round of stimulus checks that started to go out in April, including about 12 million who do not file tax returns or receive federal government benefits. And the 14.1 million Americans who are unbanked had to wait longer to receive their stimulus checks, and after receiving those checks, had trouble cashing them.
Financial coaching—one-on-one assistance to set and reach long-term financial goals—has emerged as a prominent model to change behaviors and put low- and moderate-income clients on a path toward financial stability. Changing behaviors could include introducing clients to fintech as an alternative to traditional banking, especially as a way to improve access to financial services during the pandemic. But to be effective, financial coaches must understand fintech’s limitations and hold special considerations when working with people with low incomes and other vulnerable groups.
Read the full article about access to fintech by Kassie Scott and Jorge González at Urban Institute.