By James Chemplavil
The U.S. Department of the Treasury recently released its National Strategy for Financial Inclusion, a set of objectives and recommendations to enhance access to affordable financial services for all Americans.
“Improving inclusion in the financial system is a critical part of fostering financial resilience and creating opportunities for all communities to succeed,” Treasury reported. The Strategy, which was requested by Congress in 2023, outlines five main objectives:
- Promote Access to Transaction Accounts that Meet Consumer Needs
- Increase Access to Safe and Affordable Credit
- Expand Equitable Access to Savings and Investments
- Improve the Inclusivity of Financial Products and Services Provided or Backed by the Government
- Foster Trust in the Financial System by Protecting Consumers from Illegal and Predatory Practices
Incorporating Transaction Data to Mitigate Risk
Objective 2 particularly caught my eye. According to the Treasury, expanding access to affordable credit requires integrating consumer-permissioned alternative data—like bank account cash flow or utility payment history—into credit scoring and underwriting models. Special Purpose Credit Programs targeting economically disadvantaged groups and improved product structures, such as forbearance options, can further support underserved communities. Combined, these efforts enhance financial resilience, helping consumers manage financial shocks and build long-term financial well-being.
We at Salus 100% agree! Account cash-flow data is critical to supplementing credit scores and reaching people who need financial assistance through microloans without predatory fees and interest. Our research uncovered that 95% of microloan applicants do not have a prime credit score and are thus excluded by the current credit scoring models, which decline nonprime borrowers.
However, in microloans made through Salus’ alternative scoring model based on transactional data, 95% of borrowers who repaid their loans did not have a prime credit score when they got their microloan. For those microloan applicants, it's not that they weren't creditworthy – they needed someone to give them a chance to prove it. That's what cash flow data can do.
Proactive Support for Financial Health
Treasury’s Strategy also covers supplemental structures that support financial health, like community nonprofits, academia, banks, credit unions and fintechs, like Salus. As the Treasury Department concluded in its National Strategy for Financial Inclusion, it takes a village to provide American consumers with the tools and knowledge to achieve financial stability. Banks, credit unions and fintechs are critical pieces of the solution to generational poverty, low financial literacy and financial inclusion through the myriad counseling and educational programs we were created to provide. Treasury welcomed all stakeholders to support its Strategy with actions that innovate financial services and create a more inclusive financial landscape.
The first step is understanding when a consumer is in financial distress and reaching out to them before it becomes a crisis, like missing a rent or loan payment or turning to predatory lenders. Leveraging customer and member data can help banks and credit unions reach those consumers displaying signs of financial distress. Salus’ Stress Score is a critical tool in supporting a strong portfolio for your bank or credit union while also promoting the financial health of your community members.
The Treasury Department said it would provide periodic updates on the success of the strategic objectives highlighted in the Strategy. Together, banks and credit unions and fintechs, private and public sectors, big thinkers and determined doers, can make financial inclusion a reality.
James Chemplavil is CEO/Co-Founder of Salus.