Financial inclusion is no longer optional

Increased public consciousness plus new regulations underscore why financial inclusion is important

Across the financial services industry, the rules of financial inclusion are being rewritten. In the last few years, the global pandemic, looming economic challenges, a rapidly changing and competitive labor market, and calls for racial and social equality have brought the need for financial inclusion to the forefront of public consciousness. While fair lending has long been kept top of mind by financial institutions, organizations need to focus on the benefits of financial inclusion.

Financial inclusion is the ability for individuals and businesses to have access to both useful and affordable financial products and services that meet their needs and have those products delivered in a responsible and sustainable way. One of the most significant drivers for financial inclusion is recently proposed consumer protection regulatory changes. Several regulators—including the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation—are continuing to push forward an approach that embraces the spirit of regulatory requirements versus only the letter of the law.

Financial inclusion at the forefront of regulatory changes

Recent regulatory changes have demonstrated the broader industry movement of not only strengthening the enforcement of fair and responsible banking issues but also enhancing financial inclusion practices.

This revised approach to both supervisory expectations and regulatory requirements, as well as embracing the spirit of regulatory requirements versus the letter of the law, is evident in recent proposed changes to foundational regulations, including UDAAP, CRA, and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

As part of preparing to adhere to these regulatory expectations, financial institutions should begin to evaluate their products and services through the perspective of advancing financial inclusion.

Benefits of a more inclusive financial services industry

While organizations have made strides to advance financial inclusion and embrace meaningful and sustainable changes, the continued increase in social, economic, and political drivers—notably several proposed regulatory changes—have made financial inclusion a business imperative. To truly embrace and implement the required changes, both financial institutions and regulators should work together to develop an understanding and alignment of financial inclusion priorities and how to implement the recently enhanced regulatory changes through an established financial inclusion framework. Pursuing creative options, such as regulatory sandboxes to test new products and services, is one option.

The recent regulatory developments and growing industry demand for more accessible financial products and services will continue to drive fair and responsible banking programs to evaluate and innovate to meet the expectations and objectives of a more inclusive financial services industry.