Insights from the Hope Global Forum 2017
Imagine a credit card where instead of a good credit score, the prospective borrower simply needed to be willing to attend two days of financial literacy training. Or imagine if a company could earn a tax credit for co-signing loans for its employees.
Doable? Or not in a million years?
Those are only two of the many groundbreaking ideas discussed by 3,500 people over three days at the Hope Global Forum in Atlanta this week. Attendance by the heads of major federal agencies, CEO’s of massive multi-national banks, state and municipal leaders, major media voices, and the country’s leading non-profits is proof that, while there’s still a lot of work to do, the movement to improve the country’s financial health is growing in size and influence.
This year’s theme focused on Uplifting the Invisible Class within the U.S., or, in other words, how “the poor, underserved, and dislocated middle class are viewed as untapped assets for entrepreneurship, job creation and economic growth.” Topics included everything from whether or not individuals’ participation in the gig economy is a choice or a necessity, to brainstorming methods of achieving more social mobility, to reducing the staggering number of incarcerated people in our country.
It was a week of inspiring stories. We heard from Chris Gardner, who battled homelessness and ultimately became a wildly successful financial executive (later made famous by Will Smith’s film “The Pursuit of Happyness”); Hank Aaron, who became a baseball legend in the face of abject racism and made far more money by building a business empire in Georgia than he ever did swinging a bat; and Kim Anthony-Morrow, who emerged from the California foster care system and is now a widely respected voice on how to make a difference in urban and underserved communities.
It was also a week of ideas big and small, from the twelve youths who were brought on stage to pitch their business ideas, to solutions that could help people in the gig economy more easily prove their income to banks, to the launching of ABLE accounts (tax-advantaged savings accounts for the disabled), to giving every child a seeded savings account, to strategies to help prepare kids entering today’s schools for jobs that won’t even exist for another fifteen years.
Many of the great ideas proposed at the conference might be difficult to implement, and we might not know if they’ll work until we try them. But as civil rights icon Andrew Young pointed out to Hank Aaron in one session, Hammerin’ Hank didn’t become the all-time home run leader without also becoming the all-time strike out leader.
I spoke on a panel titled "Banking in the Shadows: Engaging the Credit Invisibles" along with some of the country’s most influential voices on this issue. The panel included executives from the most influential government agency on the topic of creating a fair and inclusive financial system, the Consumer Financial Protection Bureau (CFPB); a renowned leader in credit scores, FICO; and one of the world’s largest banks, Bank of America (B of A).
Each organization discussed how it’s tackling the problem of how to help the 56 percent of Americans with subprime credit scores from a different angle, but with similar goals in mind. The CFPB is heavily promoting financial literacy, using its huge platform to drive awareness of the issue of credit invisibles, and bringing in innovators to try out new ideas with Project Catalyst. FICO has launched a groundbreaking new credit score, the FICO-XD model, which looks at non-traditional data to assess someone's credit-worthiness. They’ve also recently removed some public records data, which should increase many people’s score. B of A has renewed its focus to work with people who may not yet qualify for its loans, helping them develop action plans for longer-term credit building. And of course, I spoke about how LendUp is using technology to create socially responsible credit cards, personal loans, and payday loan alternatives that have never existed before.
While we all had ideas, the most rewarding part of the session, for me, was when the discussion turned into a workshop with the audience. The audience’s ideas were inspiring in their thoughtfulness and creativity. They ranged from policy proposals, to innovative financial products, to strategies for reaching more individuals in the community. There were a few that stood out to me:
- Mandate financial literacy in schools nationally, at least as early as high school, if not earlier.
- Create joint parent/child credit lessons and after-school programs.
- Offer a starter credit card that is underwritten against a co-signer with a solid credit history, but which reports activities only for the credit-invisible person to the bureaus (I'm going to have our Cards team dig into this one!).
- Create a tax incentive for businesses that invest in their employees by providing high-quality financial literacy training.
- Develop a data-sharing network with foreign banks to help immigrants and refugees more quickly plug into the U.S. mainstream financial system.
The diversity of ideas in the room was a reflection of the diversity in the audience. There were leaders of community-based nonprofits, college professors of finance, executive directors of major national non-profits like the Credit Builders Alliance, community-building teams from large regional banks, teachers, religious leaders, and even librarians.
What everyone in the room seemed to arrive at collectively is that there is no silver bullet for solving the problem of credit invisibility. The issues are too complex and too broad for there to be a single solution, even though I'd love for LendUp to be able to solve all of them! Government, nonprofits, the financial services industry, employers, and schools all have a role to play. It’s truly going to take the whole village. And it’s a village I’m proud to be a part of. We’ve made some progress, but there’s clearly a lot more work to do. It was motivating to see so many up for the challenge.
Have an idea to add to the conversation? I’d love to hear from you.
Disclaimer: LendUp is not providing financial, legal or tax advice. If you need or want such advice, please consult a qualified advisor.