Business

Wells Fargo Launches Banking Inclusion Initiative to Help Unbanked

African Americans, Latinos, Native Americans Get Access yo Low-Cost Banking

Published

3 years ago

May 21, 2021

On Monday, Wells Fargo announced the Banking Inclusion Initiative, a 10-year commitment to help unbanked individuals gain access to affordable, mainstream, digitally-enabled transactional accounts – a meaningful entry point to fully participating in the economy and achieving financial stability.

The initiative will focus on reaching unbanked communities and, in particular, helping remove barriers to financial inclusion for Black and African American, Hispanic, and Native American/Alaska Native families, which account for more than half of America’s 7 million unbanked households1. It also will assist those who are underbanked or underserved – individuals who may have a bank account yet continue to use high cost, non-bank services and have similar needs.

Wells Fargo will bring together multiple national and community stakeholders to roll out the broad-based initiative that is designed to increase access to affordable products, digital banking and financial guidance within unbanked communities. Through this initiative, Wells Fargo also will collaborate with partners to explore solutions to the credit challenges facing unbanked individuals.

This year, the bank will work with partners to set and begin measuring a 10-year goal for reducing the number of people who are unbanked, with milestones along the way.

According to 2019 FDIC data1, 12.2 percent of Hispanic households, 13.8% of Black households, and 16.3% of American Indian/Alaska Native households in the U.S. don’t have access to a mainstream checking account – compared with 2.5% of white and 1.7% of Asian households.

The FDIC also reports that while these figures have been trending downward, the number of unbanked households will likely increase in the aftermath of the ongoing COVID-19 pandemic.

“We recognize the high number of unbanked households is a complex and long-standing issue that will require gathering the best minds, ideas, products and educational resources from across our communities to bring about change,” said CEO Charlie Scharf. “Through our Initiative, we will organize our resources under one umbrella and work with a broad and diverse group of stakeholders on a sustained multi-year effort to accelerate financial inclusion in the U.S.”

The commitment will be organized around three areas:

1. Access to Affordable Products and Digital Solutions

Wells Fargo will deepen its existing relationships with Black-owned Minority Depository Institutions (MDIs) to support their work in the communities they serve, including outreach efforts and providing the option for their customers to withdraw cash from Wells Fargo’s ATMs and incur no Wells Fargo fees. In addition, Wells Fargo is offering access to a dedicated relationship team that will work with each MDI on financial, technological and product development strategies to help strengthen and grow their institutions.

· In recognition that unbanked and underbanked individuals need access to short-term credit, Wells Fargo will increase funding and support to expand the Credit Builders Alliance (CBA) low-cost, credit-building consumer loan program. The organization’s CBA Fund will provide patient loan capital, capacity-building grants and technical assistance to their nonprofit lender members, enabling low-cost consumer loans for low- to moderate-income (LMI) individuals to meet short term cash needs and establish or improve their credit scores.

Wells Fargo will increase awareness and outreach about low-cost, no–overdraft fee accounts, such as Wells Fargo’s Bank On-certified Clear Access Banking.

· Wells Fargo will broaden its collaboration with CFE Fund and local Bank On coalitions to pilot new strategies and approaches that help overcome barriers to banking access in several markets with high concentrations of unbanked households. The program will focus on helping those who are unbanked navigate the financial system, develop an easier, more seamless path for them to open a Bank On-certified account and access services they need within mainstream banking. It will be used to identify best practices that can be applied on a national scale.

· Wells Fargo will work closely with Fintechs that are deeply committed to helping underserved communities. For instance, Wells Fargo is among the investors in Greenwood, a digital platform for Black and Latino individuals and business owners. The bank also has started a collaboration to help the Fintech MoCaFi provide banking to unbanked individuals, starting with offering MoCaFi customers the ability to use their MoCaFi debit card at Wells Fargo ATMs without incurring fees from Wells Fargo.

2. Financial Education and Advice

· Wells Fargo is working with the Historically Black Colleges and Universities (HBCUs) Community Development Action Coalition to launch Our Money Matters, a comprehensive financial wellness initiative for college students of color, who disproportionally face greater financial challenges and college debt. The initiative aims to equip students with much needed financial capability skills and access to support services. Over the next 3 years, the program will expand to 25 HBCUs and Minority Serving Institutions.

3. Launching National Advisory Task Force

· Recognizing the difficulty of addressing the unbanked issue in the U.S., Wells Fargo will establish and lead a broad coalition to help with this multi-year commitment. Wells Fargo is forming a National Unbanked Advisory Task Force that will work with the bank in developing solutions to bring more people into the banking system from underserved communities, while also providing feedback on the initiatives that will be implemented and helping determine the best ways to measure success. The task force will feature representatives from leading organizations, including LULAC (League of United Latin American Citizens), NAACP (National Association for the Advancement of Colored People), National Bankers Association, NCAI (National Congress of American Indians), UnidosUS, National Urban League, and Mississippi-based Hope Enterprise Corporation.

“With branches in more communities than any other financial institution, we believe we have a responsibility to do even more to help address this issue and the pandemic has increased the urgency,” said Mary Mack, CEO of Consumer and Small Business Banking at Wells Fargo. “It is why we’re launching this comprehensive initiative. It is our hope, working closely with our partners, we will be able to make a difference over time in addressing such a critical problem for our society.”

Edith Rocío Robles is an assistant vice president for Corporate Communications.

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Oakland Post: Week of September 11 -17, 2024

The printed Weekly Edition of the Oakland Post: Week of September 11 – 17, 2024

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2 hours ago

September 13, 2024

Oakland Post

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Google’s New Deal with California Lawmakers and Publishers Will Fund Newsrooms, Explore AI

Gov. Gavin Newsom, California lawmakers and some newspaper publishers last week finalized a $172 million deal with tech giant Google to support local news outlets and artificial intelligence innovation. This deal, the first of its kind in the nation, aims to invest in local journalism statewide over the next five years. However, the initiative is different from a bill proposed by two legislators, news publishers and media employee unions requiring tech giants Google and Meta to split a percentage of ad revenue generated from news stories with publishers and media outlets.

Published

2 days ago

September 11, 2024

Oakland Post

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By Bo Tefu, California Black Media

This deal, the first of its kind in the nation, aims to invest in local journalism statewide over the next five years. However, the initiative is different from a bill proposed by two legislators, news publishers and media employee unions requiring tech giants Google and Meta to split a percentage of ad revenue generated from news stories with publishers and media outlets. Under this new deal, Google will commit $55 million over five years into a new fund administered by the University of California, Berkeley to distribute to local newsrooms. In this partnership, the State is expected to provide $70 over five years toward this initiative. Google also has to pay a lump sum of $10 million annually toward existing grant programs that fund local newsrooms.

The State Legislature and the governor will have to approve the state funds each year. Google has agreed to invest an additional $12.5 million each year in an artificial intelligence program. However, labor advocates are concerned about the threat of job losses as a result of AI being used in newsrooms.

Julie Makinen, board chairperson of the California News Publishers Association, acknowledged that the deal is a sign of progress.

“This is a first step toward what we hope will become a comprehensive program to sustain local news in the long term, and we will push to see it grow in future years,” said Makinen.

However, the deal is “not what we had hoped for when set out, but it is a start and it will begin to provide some help to newsrooms across the state,” she said.

Regina Brown Wilson, Executive Director of California Black Media, said the deal is a commendable first step that beats the alternative: litigation, legislation or Google walking from the deal altogether or getting nothing.

“This kind of public-private partnership is unprecedented. California is leading the way by investing in protecting the press and sustaining quality journalism in our state,” said Brown Wilson. “This fund will help news outlets adapt to a changing landscape and provide some relief. This is especially true for ethnic and community media journalists who have strong connections to their communities.”

Although the state partnered with media outlets and publishers to secure the multi-year deal, unions advocating for media workers argued that the news companies and lawmakers were settling for too little.

Sen. Mike McGuire (D-Healdsburg) proposed a bill earlier this year that aimed to hold tech companies accountable for money they made off news articles. But big tech companies pushed back on bills that tried to force them to share profits with media companies.

McGuire continues to back efforts that require tech companies to pay media outlets to help save jobs in the news industry. He argued that this new deal, “lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry.”

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Opinion: Black Workers Depend on Same-Day Pay. Why is Gov’t Trying to Restrict It?

It’s no secret that too many Americans are living paycheck to paycheck. What appears to be a secret is that an industry that is casting lifelines to those in need is being blocked by state and federal regulators. The industry in question is Earned Wage Access (EWA). EWA is an innovative fintech solution that empowers workers and helps them pay bills on time by accessing wages they’ve already earned. A 2021 study found that EWA services often prevent consumers from missing bill payments and slipping further into debt.

Published

3 days ago

September 10, 2024

Oakland Post

Jay King is CEO of the California Black Chamber of Commerce.

Jay King, Special to California Black Media Partners

The industry in question is Earned Wage Access (EWA). EWA is an innovative fintech solution that empowers workers and helps them pay bills on time by accessing wages they’ve already earned. A 2021 study found that EWA services often prevent consumers from missing bill payments and slipping further into debt.

Despite the many benefits and the fact that businesses all across the country, including Paychex, now offer EWA to employees, the Consumer Financial Protection Bureau (CFPB) recently issued guidance that could effectively wipe out this tool and, in the process, let struggling families, already in jeopardy, drown even deeper in debt.

The numbers tell the story. According to a recent study, 66% of Americans report living paycheck to paycheck, while 40% report being unable to afford a $400 emergency expense. They face hardship paying bills, covering financial emergencies, and otherwise making ends meet. These aren’t just workers with minimum-wage jobs either; half of those U.S. consumers facing hardship earn more than $100,000 per year.

This dynamic is especially pernicious in the Black community. According to recent figures, Black Californians currently have the lowest household income of any major racial or ethnic group in the state. Research also indicates that nearly a third of Black families are late paying their debts and 42% use credit cards just for basic living expenses while half do so to send their kids to college.

EWA is ready to support these individuals, yet the CFPB seems to think these services are just loans masquerading as something new. Not only is this wrong, but the agency’s interpretive guidance reverses their previous guidance and contradicts the established language and interpretation of the Truth in Lending Act (TILA).

This change could have a devastating impact on the very people it purports to protect. By categorizing EWA as loans, the CFPB would impose unnecessary regulations that stifle innovation and could drive consumers back toward high-cost payday lenders.

As I mentioned, the numbers tell the story, and EWA has an impressive track record. A recent study from Citizens Bank found that seven in 10 middle-market companies currently offer EWAs to employees, with more planning to do so in years to come. As it happens, few states better illustrate the value, and excellent ROI, of EWAs than California. Californians employed by Walgreens, Home Depot, FedEx Office and other businesses have accessed more than $1.67 billion in wages through EWA. Equally promising, more than half of consumers who tap into EWA can now afford a $400 emergency.

EWA services have always proven to serve the greater good, particularly in supporting underserved communities like the Black community, which is disproportionately affected by financial instability. The CFPB should take advantage of this opportunity to make sure they continue to do so, rather than creating obstacles that could undermine their effectiveness.

I urge the CFPB to rethink this misguided guidance. The agency must prioritize fairness and innovation to protect both consumers and the businesses that employ them.

About the Author

Jay King is CEO of the California Black Chamber of Commerce.