By Shana Richardson, CEO, Ser Technology Corporation

The Bill & Melinda Gates Foundation recently cited mobile banking as one of the four areas they anticipate will drive major breakthroughs in alleviating poverty and expanding financial inclusion for the underserved over the next 15 years. The number of mobile subscribers is projected to grow from 3.6 billion today to 4.6 billion by 2020. 

Wow! What an opportunity to serve a broad market that truly needs responsibly priced financial services.

Most banks and credit unions are making meaningful progress in using advanced data for marketing and deploying more streamlined technology for lending. The problem is that many consumers can’t even open a checking account due to punitive account-opening procedures, like ChexSystems inquiries which 80% of lenders use and rely mainly on negative account history.

Many credit unions do open checking and lending accounts to their members most in need, but they remain the most prime lenders out of all financial services providers.

–Shana Richardson 

Provided that a consumer with a few minor dings in their checking account history can open an account, getting a loan is a different matter altogether. Banks and credit unions depend on automated underwriting in which nonprime credit applications often fail and are subject to additional scrutiny. Typically, banks and credit unions underwrite on average at a 650 and above FICO score.

Data and technology are making lending easier for prime consumers. Nonprime consumers are more disenfranchised than ever, paying egregious interest rates for basic financial services, like payday loans and auto title loans.

It is imperative we continue to develop financial solutions that are affordable, convenient, transparent and accessible for underserved markets. Financial inclusion is about much more than just having a bank account. At its root level, it is a key element of social and economic inclusion. We must continue to help people participate in today’s connected economy. Reaching the unbanked and underserved population is a win for both credit unions and those with less than pristine credit; it can provide new members for credit unions, while also connecting people to responsible financial services that can help them save and manage their money.

Ready to make a difference in the credit union market? Join the Underground Community today!

Empathetic business practices are certainly about doing the right thing, but credit unions with solid risk-based pricing and practices are also doing good business by making critical loans to members at fair prices. These credit unions create loyal relationships with their members.

Many credit unions do open checking and lending accounts to their members most in need, but they remain the most prime lenders out of all financial services providers.

Are your credit union’s practices and policies empathetic to your members’ needs? Maybe it’s time to re-evaluate and help more members get checking accounts and reasonably priced auto loans. If credit unions truly want to serve their communities better, providing more access to the underserved is a step in the right direction.