In the last several decades, new technologies in the financial industry have emerged as consumer needs have changed. More and more financial institutions are embracing new technologies like mobile banking and electronic payments, with some even looking ahead to digital currency. However, as these technologies continue to develop, so many underserved communities remain left behind. Communities that still rely heavily on cash payments are being overlooked due to a lack of access to basic banking services, leading to limited economic participation from many consumers in these areas. Many communities are being forgotten due to big banks closing branches in different parts of the country, resulting in the creation of numerous banking deserts.
Credit unions can help bridge the gap to a more inclusive financial system. Credit unions, by nature, were created to directly serve their local communities, specifically those that may have limited access to financial services. Credit unions thoroughly understand the needs of their communities, more than big banks, making them the best option to help local consumers. The credit union industry is known for its ability to rise above the rest when it comes to exemplary customer service, so it’s a given that they’ll be able better reach underserved communities through innovative financial products and services.
Credit unions can also help share information about underutilized government incentives and programs that could greatly benefit underserved communities. Because credit unions are acting as a resource, more Americans in need can learn about government programs to aid their financial situation.
It was made evident through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) that credit unions can quickly adapt their services to offer help to their communities. Throughout the program, credit unions stepped up to offer support to the many Main Street small businesses in need who were turned away by the big banks.
For these reasons, it is imperative that Congress support efforts to allow all types of credit unions to add underserved areas to their fields of membership. Credit unions are proud of their service to underserved communities and want to do more. Existing legislation like the NAFCU-supported Expanding Financial Access for Underserved Communities Act, currently before the House Financial Services Committee, would help take important steps toward providing more financial services options to consumers who might not have access to them now.
So many Americans are underbanked, and big banks are continuing to close branches in the neediest areas. Allowing credit unions to expand their fields of memberships to provide services to disadvantaged communities can help combat banking deserts and branch closures in rural areas.
As the nation recuperates from the ongoing effects of the pandemic, it is vital for all communities to regain their financial footing. Regardless of location or socioeconomic status, everyone should have access to financial services and credit unions stand ready and are uniquely positioned to help those who may not have that immediate access. NAFCU is determined to continue working with Congress to help accomplish these goals and further the financial support available for underserved communities.
Connect with Dan Berger on Twitter, @BDanBerger, and on his blog at nafcu.org/berger-leadership-blog.