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Journal Article
Digital Currency, Digital Payments, and the 'Last Mile' to the Unbanked
Digital forms of payment are either not accessible or highly costly for unbanked consumers. This is because these forms of payment must be "funded" by some source of money, such as cash or a bank account. That creates the "last-mile" problem for the unbanked. This article examines various solutions for the funding problem that have been proposed in the literature, by regulators, and in bills submitted to Congress.
Discussion Paper
Meet People Where They Are: Building Formal Credit Using Informal Financial Traditions
The Consumer Finance Institute hosted a workshop in February 2019 featuring José Quiñonez, chief executive officer, and Elena Fairley, programs director, of Mission Asset Fund (MAF) to discuss MAF’s approach to helping its clients improve access to mainstream financial markets. MAF’s signature program, Lending Circles, adapts a traditional community-based financial tool known as a rotating savings and credit association (ROSCA) to help establish or expand credit reports for participants who may not be able to do so through traditional means. Lending Circles have served more than 10,000 ...
Journal Article
Digital Currency, Digital Payments, and the 'Last Mile' to the Unbanked
Digital forms of payment are either not accessible or highly costly for unbanked consumers. This is because these forms of payment must be "funded" by some source of money, such as cash or a bank account. That creates the "last-mile" problem for the unbanked. This article examines various solutions for the funding problem that have been proposed in the literature, by regulators, and in bills submitted to Congress.
Discussion Paper
How and Why Do Consumers Use “Buy Now, Pay Later”?
In a previous post, we highlighted that financially fragile households are disproportionately likely to use “buy now, pay later” (BNPL) payment plans. In this post, we shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility. Our results reveal substantially different use patterns, as more-fragile households tend to use the service to make frequent, relatively small, purchases that they might have trouble affording otherwise. In contrast, financially stable households tend to not use ...
Journal Article
Prepaid Cards: An Inadequate Solution for Digital Payments Inclusion
Although prepaid cards have the potential to address digital payments exclusion, their use among unbanked households remains low.
Discussion Paper
Meet People Where They Are: Building Formal Credit Using Informal Financial Traditions
The Consumer Finance Institute hosted a workshop in February 2019 featuring Jos Quionez, chief executive officer, and Elena Fairley, programs director, of Mission Asset Fund (MAF) to discuss MAF?s approach to helping its clients improve access to mainstream financial markets. MAF?s signature program, Lending Circles, adapts a traditional community-based financial tool known as a rotating savings and credit association (ROSCA) to help establish or expand credit reports for participants who may not be able to do so through traditional means. Lending Circles have served more than 10,000 clients ...
Discussion Paper
Digital Currency, Digital Payments, and the 'Last Mile' to the Unbanked
Digital forms of payment are either not accessible or highly costly for unbanked consumers. This is because these forms of payment must be "funded" by some source of money, such as cash or a bank account. That creates the "last-mile" problem for the unbanked. This article examines various solutions for the funding problem that have been proposed in the literature, by regulators, and in bills submitted to Congress.
Working Paper
The Role of Bank-Fintech Partnerships in Creating a More Inclusive Banking System
Fintech firms are often viewed as competing with banks. Instead, more recently, there has been growth in partnership and collaboration between fintech firms and banks. These partnerships have allowed banks to access more information on consumers through data aggregation, artificial intelligence/machine learning (AI/ML), and other tools. We explore the demographics of consumers targeted by banks that have entered into such partnerships. Specifically, we test whether banks are more likely to extend credit offers (by mail) and/or credit originations to consumers who would have otherwise been ...
Report
Financial inclusion and consumer payment choice
This report examines similarities and differences among three groups of consumers: those without a checking or savings account (unbanked), bank account adopters who have used alternative financial services (AFS) in the past 12 months (underbanked), and bank account adopters who did not use AFS in the past 12 months (fully banked). Consumers in the three groups have different demographic characteristics, income, and payment behaviors: ?The payment behavior of the underbanked is similar to that of the fully banked. ?Unbanked consumers make fewer payments per month than the fully banked and the ...
Journal Article
Banking on Distributed Ledger Technology: Can It Help Banks Address Financial Inclusion?
Despite its promise, distributed ledger technology is unlikely to draw unbanked consumers into the financial mainstream