McWilliams laid out the FDIC’s vision during her keynote address to the University of Chicago Law School and American Financial Exchange Webinar focused on “The Role of Minority Depository Institutions and Innovation in the Age of COVID-19.”
“Shaped by my personal experiences and guided by a commitment to increasing financial inclusion in traditionally underserved communities, one of my priorities as FDIC Chairman has been expanding our engagement and collaboration in support of [Minority Depository Institutions],” she said during the address.
Minority Depository Institutions (MDI) are defined as federally insured institutions in which a majority of the voting stock is owned by minority individuals, a majority of those serving on the board of directors are minorities and the community it serves is occupied by a predominantly minorities. This is especially important, she pointed out, as the COVID-19 pandemic continues to disproportionately impact minority communities.
The Joint Center for Housing Studies at Harvard University reported Hispanic and Black households are more likely to lose income and experience troubles making rent and mortgage payments than other demographics due to the COVID-19 pandemic, per information from the Census Bureau. The May analysis included 89,000 respondents who discussed the impacts of COVID-19-related lockdowns and restrictions.
McWilliams talked about her own journey from Yugoslavia in the 1970s and how it shaped her perspective on the importance of creating financial equality. She touched on her personal challenges when trying to build a financial future in a new country while having little money and no credit history.
“While it would be easy to look at me today through the lens of the office that I humbly hold and assume that I must ‘belong,’ I know what not belonging feels like in this society,” she said. “I understand the perspective of those who cannot make ends meet despite holding multiple jobs, who cannot qualify for credit, who watch their checking account balance with daily trepidation, who ration heat in winter to lower utility bills. When you have to do all that and still barely survive, it is hard to feel that you ‘belong.’ You feel disenfranchised instead.”
FROM TWITTER
Bank for International Settlements @BIS_org
"The volume and value of cross-border payments continued to grow over the last 8 years, despite the decline in the number of correspondent banks, suggesting higher concentration #FinancialInclusion https://bis.org/cpmi/paysysinfo/corr_bank_data/corr_bank_data_commentary_2008.htm"
McWilliams also said encouraging innovation is critical to improving banking inclusion. New tech, she said, can bring in new customers and allow them to have access to new services and products as well as lower credit costs.
“We can foster the development of new technologies that improve the way banks operate. We can engage with banks, fintechs, and other stakeholders to ensure that institutions are comfortable offering innovative products and services, consistent with safety and soundness principles and consumer protection laws,” she said during the address. “And, we can work to remove unnecessary barriers that create operational and regulatory uncertainty for institutions that want to innovate, but are reluctant to do so.”
Acknowledging the cost of innovation can be high at times, and the lack of information, expertise and infrastructure can be prohibitive, McWilliams said fintech partnerships are critical to move forward with inclusive practices. To that end, the FDIC launched the FDiTech initiative last year to promote innovation and inclusion. "Fintechs can serve as great equalizers by allowing ‘little guys’ to compete more effectively while satisfying consumer demand,” she said.
