Financial Inclusion: A Fundamental Right for All

For almost half a century, Inclusiv has been working to expand access to responsible financial services for underserved minority populations and communities throughout the United States. Financial inclusion is one of the most effective mechanisms to empower low-income consumers with asset-building tools to achieve financial security. We believe that access to responsible financial products is a fundamental right, and all of our programs and initiatives are guided by this principle. We believe that credit unions are the best vehicle to promote economic revitalization and connect consumers with affordable, yet sustainable financial products and services. Credit unions are controlled by the members they serve, are accountable to the communities where they operate and are mission driven. Day after day, credit unions open the doors of opportunity for everyone in the community, regardless of race, ethnicity, sex, sexual orientation or immigration status.

Minority populations have been historically marginalized by the financial mainstream; the lack of access to asset-building opportunities has significantly limited their ability to create wealth, which is reflected in low homeownership rates and lower higher education attendance and completion rates. Further, Hispanics, African Americans and Native Americans have the highest unbanked and underbanked rates in the country and are consistently targeted by predatory lenders.

Financial exclusion doesn’t only affect minorities and low-income consumers. According to the CFPB, 26 million Americans are “credit invisible.” Experian recently reported that 78% of full-time workers live paycheck-to-paycheck and 71% of U.S. workers live in debt. 35% of the adult population has credit scores below 650.

Credit unions can and should be the solution to these challenges. Our members report and our research consistently demonstrates that financial inclusion and community development are not only sustainable activities, but are drivers of growth and relevance. In fact, credit unions that focus on financial inclusion tend to be more profitable, lend more actively and grow faster than their mainstream peers. These trends are more evident for small and midsize credit unions. Mission and margin can and should go hand in hand.

High impact doesn’t compromise financial performance. It’s quite the contrary; CDFI (community development financial institution) credit unions that lend deeper make a bigger impact both on their members and communities. Their key performance indicators (earnings, asset growth, loan to assets and membership growth) consistently show they tend to outpace credit unions serving a more mainstream population.

At Inclusiv, we have developed several initiatives to help credit unions go deeper into the market and reach underserved minority communities:

African American Credit Union Initiative and Rural CDCU Initiative

Over the past 25 years, the wealth gap between black and white Americans has nearly tripled. Today, the typical African American household has accumulated less than one-tenth the wealth of a typical white household. The Pew Research Center reported that in 2013, median white household wealth in the U.S. totaled $140,000 versus $14,000 for Hispanics and $11,000 for African Americans. Economic advantages – including higher income, less debt, more home equity and retirement savings – accrue over time, creating wealth that gets passed on to the next generation.

Inclusiv/Communities is leading initiatives to bolster and grow credit unions serving communities of color to address these economic inequalities. Inclusiv established the African American Credit Union Initiative (AACUI) and Rural CDCU Initiative to work with community development credit unions (CDCUs) serving predominantly African American communities to build long-term and viable business models. African American credit unions are critical niche lenders providing responsible financial products and services to some of the most vulnerable communities in the U.S. and provide an alternative to high-cost predatory lenders. Through AACUI, Inclusiv is working with credit unions in underserved areas of New York, N.Y., and Chicago, Ill., to showcase their many years of combined experience and continued relevance to the communities they serve. In the Rural CDCU Initiative, Inclusiv is rebuilding networks of credit unions that are led by and serve rural, low-income communities of color in the Southeast, providing a combination of pass-through grants, training and technical assistance with an initial group of five minority depository institutions to build their capacity to serve rural communities in Alabama, Louisiana and Mississippi. AACUI and the Rural CDCU Initiative have together enabled CDCUs to make critical infrastructure investments, including expanding marketing and business development online and in person, purchasing up-to-date technology hardware and software, and providing training to their staff and boards.

Concord Federal Credit Union, headquartered in Brooklyn, N.Y., demonstrates the power and potential of AACUI’s field building work. Concord serves over 900 members, and offers the residents of the Bedford-Stuyvesant neighborhood in Central Brooklyn a variety of savings products and affordable rates on personal, auto, credit building and credit repair loans. Concord Baptist Church’s ministry to the community extends far beyond the credit union, to include running the Ember Charter School, a nursing and rehab center, senior housing and the Christ Fund, which has invested more than $1 million in grants to the community since its creation in 1988. In December 2018, Concord announced a new partnership with Bedford Stuyvesant Restoration Corporation, the nation’s first Community Development Corporation, to collaborate on building long-term programs and services that help close gaps in family and community wealth, and create greater shared prosperity in Central Brooklyn.

Juntos Avanzamos

Serving immigrants is at the core of what credit unions do. It is an integral part of our movement’s history. The first credit union in the U.S., St. Mary’s Bank, was founded by French-Canadian immigrants who came to work at the textile mills in New Hampshire. Faced with the indifference from local banks, they came together to form a credit union. Serving immigrants is at the heart of our genesis as a movement. One hundred years later, immigrant communities are faced with many of the same challenges faced by the founders of St. Mary’s. Fortunately, credit unions now represent a solid alternative to consumers in general and immigrants in particular.

For the credit union industry, the Hispanic and immigrant communities are at that crossroad where mission meets opportunity. No other market offers the same potential to do well by doing good.

Immigrants today have become a large and vibrant part of the U.S. economy. In many communities, however, immigrants remain largely unbanked and vulnerable to predatory financial service providers. Despite Hispanics growing influence in the U.S. population, culture and economy, this community is still not truly included in financial services in the U.S. and is targeted by financial predators. Over 40% of Hispanic households are unbanked or underbanked, more than double the rate of white households in the U.S. Hispanics are also twice as likely as white households to use alternative services providers such as check cashers, payday lenders and other predatory institutions.

Connecting the Hispanic community to safe and affordable financial services transcends account opening. That is just the first step. True financial inclusion requires meeting people where they are and providing them with relevant products and services. Paired with trusted guidance and support, credit unions can help move Hispanics along a path toward financial security and well-being. This is particularly true for Hispanics and immigrants who, in addition to the traditional challenges affecting the general unbanked population (affordability, lack of access, cost and complexity), face additional barriers such as documentation requirements, lack of credit history, language, culture and widespread distrust of financial institutions.

Juntos Avanzamos (“Together We Advance”), an initiative developed by the Texas Credit Union League and taken national by Inclusiv, helps to eliminate barriers that prevent Hispanics and immigrants from accessing safe and affordable banking services and credit. This month, the Juntos Avanzamos Network celebrated the growth of our network to 100 credit unions strong, an important milestone that reflects our industry’s recognition of the importance of financial inclusion for all. The Juntos Avanzamos network now serves seven million members at over 848 locations in 26 states and is constantly growing.

Juntos Avanzamos credit unions accept alternate forms of ID for account opening purposes, offer loan products for ITIN holders, have flexible underwriting criteria, offer credit builder loans, and have bilingual and bicultural competent staff. When immigrants arrive at a Juntos Avanzamos credit union, they will see bilingual signage and be greeted by bilingual staff. Consumers can present a matrícula consular, foreign passport or Municipal ID at account opening. They are able to become members, apply for a loan with their ITIN number and begin to build a credit history. Juntos Avanzamos credit unions take a holistic approach to their membership, eliminating historical barriers and integrating immigrants to the financial mainstream.

One of the newest members of Juntos Avanzamos is Suncoast Credit Union in Tampa, Fla. Suncoast is the biggest member of the Inclusiv Credit Union network and the largest CDFI in the country. With over $10 billion in assets, 864,000 members and 69 branches, Suncoast is committed to serving underserved communities that have large immigrant communities. Suncoast President/CEO Kevin Johnson said, “The Juntos Avanzamos designation is important because it demonstrates our commitment to our core value of providing access to affordable financial services to all. Serving communities where there is a high percentage of immigrants helps us provide service to those who may have more modest or limited means, and who may need extra time and guidance as they set up or solidify their new lives throughout our state. Our members can feel safe and secure with our team members because approximately 90% of our branches have a bilingual staff who can speak directly to the specific, unique and important need of our immigrant populations. This designation helps us feel proud of our own humble beginnings and we take great pride in helping families and individuals alike who have helped make the American dream alive and real in their personal stories.”

For more than a decade, Suncoast has focused on expanding its services to Hispanics and immigrants, hiring bilingual staff, developing culturally relevant marketing in Spanish – including its main website – and establishing partnerships with Hispanic organizations in the communities in which they have a presence. It also started to accept ITINs for loans, and more recently, alternate forms of ID at account opening. For Suncoast, offering relevant and affordable financial services was not enough; Suncoast has established an internal Hispanic Advisory Board to guide its initiatives and has a diverse board of directors, with four Hispanic members.

Suncoast is one of 100 Juntos Avanzamos credit unions that are serving Hispanics and immigrants throughout the nation. Inclusiv looks forward to continuing to support credit unions in their journey to expand services to underserved minority populations.

Pablo DeFilippi is SVP of Membership and Network Engagement for Inclusiv. He can be reached at pablo@inclusiv.org.