Financial Inclusion: A Sideline No More

A sudden funding crisis forced John Bryant to shake up Operation Hope and develop a new model that relies heavily on banks to promote financial literacy. If it succeeds, Bryant says, it will drive more customers to banks and credit unions — and maybe even put payday lenders out of business.

Financial illiteracy is costing cities billions in revenue. Would more money-management programs in schools — funded by the sale of government bonds — change that?

Banks want to make loans to people with scant credit histories, but the challenge is figuring out how to do so safely. One possible solution is to look at alternative data. Eager to book more loan business, more and more banks are considering such factors as rent payments, purchasing patterns, even an applicant's spelling to help predict creditworthiness.

Creating checking accounts, mortgages and consumer loans with features that suit folks with lower incomes is paying off in unexpected ways for some banks.

The unfortunate reality is that those who most need credit counseling help are also the hardest to reach. In a Q&A, the agency's financial literacy honcho, Gail Hillebrand, talks about efforts to empower the vast swath of American who aren't terribly savvy.

Could getting people to save more money be as easy as changing around the office furniture? Based on Emily Garbinsky's research, the answer is yes.

Unbanked consumers generate over $100 billion in annual revenue for alternative financial providers. New studies suggest that banks are well positioned to capture some of that revenue.

It's easy for banks to spin their wheels on local reinvestment, financial education and other efforts to help underserved communities. To make outreach programs successful, bank executives need to carefully vet nonprofit and other partners, listen to their employees on the front lines and reflect on their own reasons for getting into banking.

The upstarts are shaking up the world of small-business financing, but with fraud concerns mounting, some say it's only a matter of time before they come under the scrutiny of state and federal regulators.

Affordable pre-paid cards and checking accounts targeted at low-income customers are among the positive trends likely to gain steam in the months ahead.

SimpleFi is working with a New Jersey bank to pitch its payday loan alternative and financial educational services to employers across the country come February 1. It represents part of the trend of disruptors rethinking payroll data.

Elected officials in Santa Fe and Seattle are considering plans to form municipal banks to promote affordable housing and reach out to the underbanked. Bankers are wary since such institutions could present competition.

Ten financial institutions, including four banks, will accept the new IDNYC card as a primary form of identification for new accounts. Community advocates hope the move will help more immigrants and unbanked individuals use banking products.

Regulators would like banks to use their mobile banking services to reach the unbanked and underbanked. Some, including Southern Bancorp and BBVA Compass, are working to create mobile features that will help them compete with check cashers and payday lenders.

A commitment to financial literacy training can help turn unbanked, cash-strapped consumers into profitable, bankable customers.