Mr. Coaxum
[Op-Ed: Finance]
Here in New York City, we are proud of our vibrant African-American history and culture. Icons such as Madam C.J. Walker, W. E. B. Du Bois and Jackie Robinson have called neighborhoods across our beloved city home.
But more than anything, New York City is – and has always been – a bustling hub of innovation and a launching point for those who seek opportunity and strive for a better life.
As we celebrate the accomplishments of African-American innovators and opportunity seekers, we must not forget that many in our community face significant barriers to pursuing, let alone achieving their dreams. And while no one solution can break down the barriers on its own, we are in an era when technology can democratize how we think about financial inclusion and consequently provide people access to the tools that they need to live healthier financial lives. In doing so, we can make great strides toward greater economic justice and opportunity.
According to the Federal Deposit Insurance Corporation (FDIC), nearly 30 percent of families in the New York City area have no or only limited access to traditional banking services. Among African-American households, this grows to a staggering 53 percent. For these financially underserved families, having less comes at a high price. As James Baldwin observed, “Anyone who has struggled with poverty knows how extremely expensive it is to be poor.”
With no or only limited access to traditional banking services and few small-dollar loan offerings, these families often turn to alternatives like pawnshops and check cashers. These alternative financial services can be expensive on a relative and absolute basis, and they can be time consuming to utilize and get to. Daily challenges are exacerbated further as theft and loss are a common consequence of operating in a cash-only world.
Fortunately, advancements in electronic payment technology have the potential to help financially underserved families better access financial services and set on a path toward leveling the economic playing field. The days of using check-cashing services, money orders and other costly alternative financial services must be put behind us. We are living in the era of technology. In fact, according to the Pew Research Center, more than three-quarters of U.S. adults now own a smartphone.
Electronic payment technology, such as prepaid and payroll cards, allows financially underserved families to join the digital era. Using this technology, they can access their money more efficiently, track expenses, and pay bills and bargain shop online – things that are not possible with cash and money orders.
We’re seeing some progress on this front and have come a long way in helping financially underserved families use the tools available to them. The FDIC reports that the percentage of families in the New York City area that are unbanked decreased from 9.6 percent in 2013 to 8.9 percent in 2015. At the same time, the percentage of unbanked households using prepaid cards increased by more than three percentage points between 2013 and 2015.
Technology has been transformative for those of us living in the financial mainstream and has helped to solve first-world financial problems. But I believe it can also lift up the financially underserved community – and help overcome what I fondly refer to as second-world problems. And in doing so, we can pave the road toward greater economic justice and opportunity. That is why in 2015, I founded Mobility Capital Finance, Inc. (MoCaFi), a financial technology company with the mission to empower underbanked communities and help them transition toward healthier and more productive financial lives.
New York City is no stranger to confronting challenges – and has demonstrated an ability to overcome and lift itself up through the unwavering perseverance of the community. But for many African-American and other minority families in neighborhoods across New York City, the revitalization is not yet complete. With advancements in electronic payment technology, the opportunities that so many families dream of are now closer within reach.
Wole C. Coaxum is a founder and chief executive officer of Mobility Capital Finance, Inc. (MoCaFi).
