The U.S. Department of the Treasury’s (Treasury) National Strategy for Financial Inclusion is a set of objectives and recommendations designed to expand access to safe and affordable financial products and services for all Americans. The Strategy, requested in 2023 by Congress, was informed by Treasury’s extensive research and engagement with experts, community leaders, industry representatives, and other federal agencies, including public input through a Request for Information.[1]
The ability to fully and beneficially participate in the U.S. financial system is a foundation for financial resilience, well-being, and the opportunity to build wealth. Improving inclusion in the financial system is a critical part of fostering financial resilience and creating opportunities for all communities to succeed.
The Strategy notes that to be inclusive, financial products and services must be accessible and designed to facilitate all consumers’ ability to improve their financial resilience and well-being. The Strategy is intended to promote an inclusive financial system that works to reduce rather than compound disparities. Below is a brief summary of the objectives and key recommendations outlined in the Strategy.
Objectives and Key Recommendations
Objective 1: Promote Access to Transaction Accounts that Meet Consumer Needs
A transaction account at an insured depository institution provides a secure, convenient, and affordable way for consumers to store, send, and receive money. To tackle the persistent issue of unbanked households, government can be a primary mover in reducing the number of unbanked consumers by leveraging government-to-consumer payments to encourage transaction account openings. The private sector also has a role in promoting access to transaction accounts, and financial institutions should expand the availability of affordable and tailored accounts that meet the needs of underserved communities, such as BankOn accounts, which are transaction accounts that aim to eliminate barriers that have traditionally discouraged individuals from opening bank accounts, such as high fees, overdraft charges, and minimum balance requirements; and should evaluate their policies to improve access for underserved communities. Government should continue to promote instant payments, make investments in mobile and broadband infrastructure, and work with community partners to further expand access to digital and in-person banking.
Objective 2: Increase Access to Safe and Affordable Credit
To address significant disparities in the availability and cost of credit, financial institutions, consumer reporting agencies, and government agencies should collaborate to integrate consumer-permissioned alternative data, such as bank account cash-flow or utility payment history into credit scoring and credit underwriting models, which can open safer and more affordable credit opportunities for those who currently have no credit history or limited credit history. Additionally, expanding Special Purpose Credit Programs, credit assistance programs authorized in fair lending laws that can target “economically disadvantaged” people, can help reach underserved communities to promote fair distribution of credit. Lastly, lenders should consider ways to improve financial products’ structures, such as through forbearance, to support consumer financial health, particularly for those who experience financial shocks. By improving access to credit and products’ default structures, consumers can use these financial products to better withstand financial emergencies and make investments, improving their financial resilience and well-being.
Objective 3: Expand Equitable Access to Savings and Investments
Employers and government should take steps to improve consumers’ ability to save for retirement by providing incentives for saving and expanding access to retirement saving accounts. Employers should offer tools that facilitate emergency savings, which help employees manage short-term financial shocks without jeopardizing their long-term retirement goals. Additionally, employers should design retirement and savings benefits to equitably support employee financial health and provide financial education to promote employees’ saving and investing. Financial literacy has a positive effect on retirement readiness and retirees’ satisfaction with their financial situation during retirement. By offering evidence-based financial wellness programs or financial planning services that educate employees about retirement planning, investment basics, and the importance of starting to save early, employers can empower their workforce to make informed decisions and build sufficient savings for the future.
Objective 4: Improve the Inclusivity of Financial Products and Services Provided or Backed by the Government
Government financial products and services, such as income support programs, Direct File, and the payment channels used to disburse public payments, should be designed and delivered to enhance inclusion. Government should research the extent to which public financial products, services and programs advance financial inclusion and equity, and identify and implement opportunities to innovate in existing or new products and programs. Additionally, government should ensure that financial products and services are delivered in an inclusive, accessible manner with minimal fees and easy opportunities for application and use of benefits.
Objective 5: Foster Trust in the Financial System by Protecting Consumers from Illegal and Predatory Practices
To protect consumers from predatory practices and build trust in the financial system, regulators must rigorously enforce consumer protection and fair lending laws to ensure that financial products and services are safe, transparent, and fair.
The National Strategy for Financial Inclusion also underscores the importance of financial education and measurement to enable financial inclusion. The Strategy re-affirms the need for unbiased, clear, and relevant financial information, including plain-language product disclosures, information about consumer rights and recourse options, as well as culturally relevant financial educational resources to equip consumers to make informed financial decisions in line with their life circumstances, experiences, and goals. The Strategy also highlights the need for benchmarks to measure progress and determine whether financial inclusion is increasing over time.
Additionally, the Strategy is designed to be a dynamic and evolving framework, adaptable to changing economic conditions and emerging opportunities. The Strategy will be regularly reviewed and updated.
The success of this Strategy depends on the active participation and collaboration of various stakeholders:
- Financial service providers: Banks, credit unions, fintech companies and other service providers have a crucial role in developing and offering inclusive financial products, including through leveraging technology for broader access and partnering with community organizations.
- Government agencies: Federal, state, and local governments are called upon to implement policies that promote financial inclusion, streamline access to government financial services, and ensure robust protections for consumers, including underserved consumers who may be more likely to be targeted by predatory actors.
- Community-based organizations: Community-based organizations and advocacy groups can provide valuable insights into local needs, offer financial education or other services, and help bridge the gap between financial services and underserved populations.
- Employers: Employers are key conduits for savings opportunities, as well as trusted sources of financial information. Employers in all sectors can advance financial inclusion by offering inclusive benefits packages that support employees’ financial health.
- Researchers and Academia: Ongoing research and analysis will be vital in measuring progress, identifying emerging trends, and refining strategies for financial inclusion.
Treasury invites all stakeholders to engage with this Strategy, to innovate, and to collaborate in creating a more inclusive financial landscape.
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