Biden's broadband plan will help banks reach new markets

As President Biden sets about making his agenda a reality, there’s one item that the banking industry must be ready to embrace and propel forward: bridging the digital divide.

Biden’s initial priorities mention universal broadband as a crucial component of our modern infrastructure. And why wouldn’t it?

More than 14 million Americans still lacked broadband access by the end of 2019, according to the latest report from the Federal Communications Commission. This pain point was further exacerbated by the coronavius pandemic, leaving millions of students without access to remote learning, a large swath of the workforce unable to work remotely or easily conduct a job search, and millions of Americans without access to vital and affordable financial services to keep them afloat.

Financial and digital inclusion go hand in hand. Consider the hurdles faced by people trying to get their stimulus checks. Digital processes made it more challenging for those without Wi-Fi access to apply for, receive and use funds allocated to them.

With the new administration eager to bridge the digital divide, the banking industry must be ready to embrace this moment to drive more financial inclusion as well. Here’s how financial institutions of all sizes can help close the gap.

Create the right offerings, now

The World Bank has already highlighted how digital financial services have the power to increase speed, security and transparency while lowering costs. Simply put: More tailored, affordable services can be developed to serve poor populations thanks to digital tools, but if these populations don’t have broadband access, the services remain out of reach.

So if millions of Americans stand to gain steady internet access for the first time in the near future, banks need to have in place the right offerings for when these consumers come through their digital doors.

There are standards driving financial inclusion that already exist — maintained by the Cities for Financial Empowerment Fund and recently championed by an American Bankers Association certification initiative — that encourage banks to offer products with lower costs and no overdraft fees, for example, along with a full suite of transaction capabilities like debit and prepaid cards, and online bill pay.

Develop digital educational tools

Offering the right financial products is one piece of the puzzle, but it’s not the full picture.

Financial inclusion is about more than having a bank account. It’s about having enough financial savvy to not fall prey to a cycle of debt, and to establish savings or to build a credit score.

The hard reality is that nearly half (48%) of Americans answered financial questions incorrectly, according to the TIAA Institute’s annual study of financial literacy.

With more Americans gaining internet access and entering the digital financial system, banks should develop new online education courses and tools to empower this population. Broadband access will make financial education infinitely easier. This is especially critical as the world is still hamstrung by pandemic restrictions and broadband access would allow people to build their knowledge from the safety of their own homes.

Bridging the digital divide leads to a stronger, more diversified workforce

Beyond more immediate financial education, bridging the nation’s digital divide will increase access to higher education. This in turn, creates a more diverse, educated workforce that can help all industries, including financial services, to develop more thoughtful products driven by the diversity of experience.

Financial services as an industry must pave the way for anybody to build careers in this field. Let’s get them into intern programs and build them up to the boardrooms. Banks, fintechs and the entire industry should get behind education programs for kids, even college programs like the Georgia Fintech Academy, to entice these new minds to join the field.

This is how innovation is fostered, by bringing in new minds and diverse ideas to industries that need it. With more diverse representation, we can ensure that our products and services not just challenge that norm, but are inclusive, fair and equitable.