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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Guest Blogger : Katherine J. Flocken on Not Forgetting those Most Desperate

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Guest Blogger : Katherine J. Flocken on Not Forgetting those Most Desperate

Jo Ann Barefoot

For the holiday season, here is a moving and thought-provoking post by guest-blogger Kate Flocken, about the the need to make it possible for people of every background, in every corner of the world, to lead healthy financial lives.

I wish you all peace and joy in the new year. Jo Ann


As the Holiday Season Arrives Remember Those Most Vulnerable

Snow dusts the ground in the woods just outside of Freeport, Maine. It’s 32 °F when Jack and his two dogs emerge from their tent. Jack’s breath makes clouds in the chilly air while he heats his camp stove and prepares for the day. First he will sneak to a nearby RV campground to use the shower facilities, before looking for work, and someone willing to pay in cash.

Jack is not camping — he is running from his debt. When he moved out of his parents’ house to start college he received offers from credit card companies offering him accounts. The sign-up was easy and he started to rack up debt which spiraled out of control. Eventually he became so overwhelmed by his situation that he left his home to move someplace without an address and where his creditors could not find him. He does not see a way out of his present situation. He does not see any way to pay off his debts or rebuild his credit and he is not interested in opening a bank account because he is trying to live an invisible existence — no address. Cash only.

Over 8,000 miles away in a six-person community in southern India, Akshat and Lavanya are gathered with other members of their small community for a meeting. They are arguing with a woman, Padma, with long dark hair and glasses. The people living in the community are all victims of leprosy and the woman is the representative of a charity that is interested in working with them on a micro-lending program. The people in this community live in one building which is made up of small, 5’x4’ concrete rooms. In these rooms they have a mat on the floor to sleep on and a pail of water for both drinking and hygiene. Lavanya has a flower pot outside of her door. There is no electricity or plumbing.

The participants in the meeting are telling Padma that they do not want to be part of the micro-lending program because they do not want to risk losing eligibility for a monthly shipment of rice and beans. Padma is trying to convince them that by participating in the program they will not need the shipment because they will have a better, and self-sufficient, living.

These two situations have far more in common than it appears on the surface. In both cases the individuals involved are struggling financially and are trapped by a sense of hopelessness. They are afraid to seek help for fear of losing what little they have. They also completely lack access to or desire for any sort of financial services.

These situations highlight the immense difficulty of reaching the most underserved. Even if Jack, Akshat and Lavanya had access to a bank branch or any sort of technology, they have spiraled to a point where it is unlikely they would utilize available tools. This underscores the challenge that must be met in order to enable even the most underserved and desperate consumers to improve their financial health.

The financial services industry is experiencing tremendous change driven by startups and other organizations aiming at the un- and underbanked populations all over the world. This revolution of global fintech technology presents a tremendous opportunity to reach the underserved — but it is important to remember those who have fallen so far out of the system that they have given up.

As the temperatures drop and we celebrate the holiday season it is worth taking time to think about those who are most vulnerable and in need of help.People like Jack, Akshat and Lavanya are in need of thoughtful and considered effort to help them build their financial health and regain their pride and self-sufficiency. The first step is understanding that these consumers exist and recognizing the difficulty of reaching them. While we budget for gift buying and strategize how to navigate family dynamics it is important to consider how we can help those who must focus all of their resources on day-to-day survival. Though reaching these consumers is immensely challenging, it is crucial that innovators do not forget the most desperate members of our population — that they consider the possibilities of how their products can meet people where they are — and how new solutions can effectively engage even the most underserved.

Kate Flocken works for a nonprofit dedicated to promoting consumer financial health. She is a former U.S. Senate staff member.

Please note - the opinions expressed herein are my own and are not related to any organization.