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Banks empower those who power the economy


While we continue to measure the economy by market strength, we can’t forget that for many, financial security means affording the basics like shelter, food and gas. There’s a lot of talk about democratizing finance, but how do we move our society forward if we don’t reach the masses in a meaningful way? The underserved market — with one of the biggest populations being the middle class — requires access to a financial system that can service them responsibly. 

The opportunity 

There is a massive opportunity in providing financial services catered for the middle class. Although commonly overlooked, this segment fuels two-thirds of the world’s consumer spending. With about two of every five consumers having a credit score under 700, there is a massive population of people facing financial rejection and financial services are not meeting them where they are. 

Linda Brooks, chief technology officer at Atlanticus

Being “underbanked” starts with banks, but doesn’t end there. It impacts all aspects of people’s lives, including their ability to buy or rent a home, acquire insurance and utilize affordable services that can help get them off their feet. With millions of Americans having limited options when it comes to financial services, there is an urgent need for banks and fintechs that have a deep understanding of this demographic and can cater their offerings to them prudently. 

The challenges 

Despite a large consumer need for banking services catered toward the middle class, financial institutions are not capitalizing on it because of the challenges presented when working with those with a less-than-perfect financial history. This segment is underserved because it’s not easy to serve middle-class Americans responsibly; it’s serious work that requires deep expertise and a long track record of success to do it properly.  

Providing banking and lending services to non-prime lenders presents risks, but with 58% of Americans living paycheck to paycheck as inflation spikes, ignoring the changing environment can be detrimental. 

The solutions 

It starts at the top: to provide services to an underbanked market, you need executives, business leaders and product developers that understand that market. Focusing on diversity, equity and inclusion within our financial institutions will continue to push us forward in our evolution and understanding of the needs of all demographics.

More tactically, we must lean more heavily on tech, analytics and data to inform our understanding of the middle class better. A track record of data on consumer behavior, repayment patterns and spending habits can help banks and their partners tailor their offerings to the middle class, but data is only as good as the conclusions that can be drawn from it. 

Banks should lean on technology that can empower them to more comfortably provide services to this demographic. Deep historical data informs many financial institutions’ decision-making engines, and analytics can be tapped to better predict outcomes and minimize risks that come along with lending for both the consumer and the bank. These tech tools are readily available, however, there is not a broad enough adoption to give the everyday consumer the options they require. Banks should leverage fintechs for predictive and risk mitigation solutions that prioritize reaching these consumers in a way that provides a positive outcome for both the bank and the banked. 

The middle class plays a critical role in our economy’s growth, and yet financial services are leaving this segment underserved. The technology needed to provide banks and lenders with the security and confidence to help the middle class exists, but there needs to be a desire from the top to implement them. It starts with us, with building diverse leadership teams of individuals who want to make a change. 

Linda Brooks is the chief technology officer at Atlanticus, a financial technology company powering more inclusive financial solutions for everyday Americans, and was previously a developer at IBM for more than 16 years.  



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