Bridging the financial inclusion divide digest

Positioning purpose and profit through financial inclusion

Today’s policymakers are increasingly focused on advancing financial inclusion, and the financial services industry is making great strides toward addressing inequities in the marketplace. Learn how new and proposed regulatory developments are moving the financial inclusion imperative forward.

Standing stronger in the face of adversity

As momentum for global financial inclusion (FI) efforts gather, the financial services industry looks to step back and take a holistic view of growth, market trends, and progress toward overall objectives. Harnessing insights from current trends, industry leaders are trying to analyze and evaluate the direction and pace of the market’s financial inclusion efforts.

Prompted by a growing awareness of the societal impacts of financial inclusion (FI), there’s increased pressure from stakeholders, including regulators and employees, as well as socially conscious investors in the financial services industry, to show measurable progress in achieving economic parity in unserved and underserved markets. With the realization that universal progress hinges on the inclusion of socioeconomically disadvantaged segments, there’s growing interest in the “social” factor when measuring the environmental, social, and governance (ESG) sustainability and ethical impact.

Continuing from our May 2022 issue, we present the latest developments taking place in banking and capital markets, insurance, investment management, and commercial real estate.

Key takeaways

While financial inclusion efforts have increased significantly over recent years, regulators continue to take critical steps to implement a more equitable and resilient financial sector and to correct discrimination, increase access to financial services, and promote equality with consumer protection. In this issue, we’ve noted several aspects of the ongoing wave of regulatory initiatives to address potential inequities, including:

  • Congresswoman Waters led her team on the Federal Reserve Racial and Economic Equity Act, H.R. 2543, a historic piece of legislation on racial equity in mortgages, lending, and investments. Multiple other bills of a similar nature were passed to stand up for vulnerable communities.
  • New York Department of Financial Services enacted legislation that seeks to bolster consumer protections while addressing the inequities in its state’s financial services system.
  • Agencies issued a joint proposal to strengthen and modernize Community Reinvestment Act (CRA) regulations to deliver greater clarity, consistency, and transparency, through a new metrics-based approach to CRA evaluations for retail lending and community development financing.
  • The Treasury approved the first group of plans authorized within the new sphere of the State Small Business Credit Initiative (SSBCI) and provided almost $10 billion to states, the District of Columbia, territories, and tribal governments.
  • The FHFA released Fannie Mae’s and Freddie Mac’s (the Enterprises) Equitable Housing Finance Plans for 2022–2024, which are designed to complement the initiatives outlined in the FHFA’s Strategic Plan: Fiscal Years 2022–2026 that promote the Enterprises’ safety and soundness and foster housing finance markets that provide equitable access to affordable and sustainable housing.
Bridging the financial inclusion divide digest Issue 4

Regulatory developments to watch

Take a look back at previous digests

Issue 1: October 2021

Recent events have highlighted the urgent need for financial institutions to advance financial inclusion. Expanding access to affordable financial services for underserved and unserved markets doesn’t just recognize a moral imperative, but a business one as well. Learn how financial institutions are taking bold steps toward financial inclusion by developing and offering a variety of products and services to help serve the furthest untapped markets.

Read more

Issue 2: February 2022

Along with industry cognizance, slight nudges from policymakers now have leading institutions taking steps to incorporate robust corporate social strategies and incentives to innovatively develop products and services, invest in underserved communities, and partner with institutions outside of the industry to address the many challenges. In this issue, we’ve noted momentum of how the industry is addressing potential inequities.

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Issue 3: May 2022

Now that the industry has had time to pause, reflect, and rethink its priorities, there’s a sharper spotlight on the imminent social responsibilities that led to decisions to curb inequalities that were exacerbated by the pandemic. In this issue, we highlight current regulatory developments regarding how bias in complex algorithms is impacting consumer protection laws and insurance claims, and other notable regulatory advances.

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Financial inclusion is a critical consideration in defining an organization’s corporate social purpose. As a more human-centric economy rapidly takes shape, financial services organizations must heed the call to engage with a broader array of customer, employee, and community stakeholders in more direct, personalized, meaningful, and socially responsible ways. Learn how we can help your organization lead the way, with financial inclusion efforts that create a higher bottom line for all.

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