Consumers are better positioned to benefit from economic growth when they have access to financial products and services that responsibly meet their needs, Federal Reserve Governor Michelle Bowman said, addressing the topic of financial inclusion in a speech today at the Aspen Institute in Washington, D.C.
“Small banks, especially community banks, have a deep understanding of the local economies they serve, and can respond quickly and effectively to local needs … but no entity or group of financial institutions alone can solve the challenge of creating a more inclusive financial system,” Bowman said, noting that consumers come from a wide range of economic circumstances, have varied experiences with banking, and different needs for financial services.
“Despite the general availability of online financial services, geography, location and accessibility matter. Financial inclusion may look very different, for instance, in rural communities, compared to the suburbs of Washington, D.C., or the islands of Hawaii. The entire economy gains when more households achieve financial stability. That said, the benefits of financial inclusion do not necessarily result in the same outcomes for everyone.”
The road to a more inclusive financial system is “long and winding,” Bowman said, but the Fed has made “promising” steps forward, including supporting responsible small-dollar lending products that lead to successful repayment outcomes and that avoid continuous cycles of debt; mission-driven organizations such as minority depository institutions, women-owned depository institutions and community development financial institutions; the Central Bank Network for Indigenous Inclusion to provide access to economic and personal finance education incorporating Indigenous language and culture; and research informing financial inclusion.