The Honorable Maxine Waters June 11, 2020
Chairwoman
House Committee on Financial Services
2129 Rayburn House Office Building
Washington, DC 20515

 

The Honorable Patrick McHenry
Ranking Member
House Committee on Financial Services
4340 O’Neill House Office Building
Washington, DC 20024

 

Chairwoman Waters, Ranking Member McHenry, Members of the committee and Sub-Committee Chairman Lynch, thank you for the opportunity to provide a statement for the record on Inclusive Banking during a Pandemic/Stimulus Payment Delivery.

 

I am Wole Coaxum, Founder and CEO of Mobility Capital Finance, Inc. (MoCaFi). I spent the first phase of my career working at Citigroup, Willis Towers Watson and J.P. Morgan. As a Managing Director, and one of the most senior African Americans at J.P. Morgan, I managed national and global sales and operations teams in the areas of Treasury Services, Commercial Card and Business Banking. In my final role there, I was responsible for millions of their Business Banking customers and the bankers that serviced them.

 

In August 2014, I – like the rest of the country – watched, as the city of Ferguson, Missouri erupted in protests following the shooting death of Michael Brown.

 

At the time, there was a strong sense that Michael Brown’s death would forever change Ferguson and America. It changed me! In that moment, I made the decision to find ways to help communities like the one where Michael lived and ultimately was killed.

 

In recent months the inequities of our country’s financial systems have been highlighted and exacerbated first by the public health crisis and most recently by historic public unrest. Looking back on the experience of Ferguson, this should not have come as a surprise. Consider the inequities with which a young man like Michael Brown, who allegedly pinched a dollar’s worth of cigars from a corner market, lived on a daily basis. In Ferguson, a suburb of St. Louis, 25 percent of African Americans lived below the poverty line compared to 11% of Caucasians. The area had seen a 99 percent increase in its impoverished population in a city of just over 21,000¹.

 

And, in this community — like so many others across the nation with similar statistics — you will find more liquor stores than community centers, more corner-store carry outs than grocery stores and more alternative financial services (check-cashing, payday lending, pawn stores) than banks. With these challenges in mind, I decided to use my training and experience in financial services to create a series of tools that would foster economic development in the black community — my community — all across the United States.

 

I wanted to be a part of an economic agenda that could complement the social agenda for the Black Community. At that time, according to the 2013 FDIC Survey of Unbanked and Underbanked Households, 7.7 percent (1 in 13) of households in the United States were unbanked. This proportion represented nearly 9.6 million households. Additionally, 20 percent of U.S. households (24.8 million) were underbanked, meaning that they had a bank account but also used alternative financial services (AFS) outside of the banking system². That was a total of nearly 35 million people who did not use banks to handle their everyday affairs. Today, the FDIC finds that more than 25 percent of all U.S. households are unbanked or underbanked³ while the Federal Reserve puts the number closer to 55 million households4. In the black community, the statistics are almost double those statistics.

 

Recognition of this reality, with its consequent impacts on opportunity and economic development, began my quest to ensure that everyone in this country who wants access to a bank account can get one. Two years after the Ferguson tragedy, I launched MoCaFi, which stands for Mobility Capital Finance, with a goal to provide finance for all, and especially those in communities like those where Michael Brown lived.

 

MoCaFi is a New York City MWBE Certified financial technology company that offers an array of financial products and services including FDIC-insured bank accounts. The mission of MoCaFi is to work with vulnerable populations in a low-cost, safe, and responsible way by providing banking services for the communities who are traditionally left out of the system. By offering these services, we can begin to close the wealth gap for vulnerable communities and help small businesses that are too often unable to access capital. MoCaFi provides individual customers with no-fee bank accounts and has products that comply with all federal and state regulations.

 

I commend the Task Force for its continued focus on the unbanked and underbanked in our country. MoCaFi is committed to addressing the needs of Americans who currently fall outside the margins of the existing financial system. Each day, we are reaching and connecting with residents who fall into the category of people who are either unbanked or underbanked — including school teachers, home healthcare workers, public housing residents and even first responders.

 

The process of dispersing Economic Impact Payments (EIP) as provided through the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) laid bare the plight of the unbanked and underbanked, the inability for current federal programs and agencies to reach them, and the increased injury this disconnect provides for an already vulnerable segment of our population.

 

As the Task Force explores low or no cost banking options that utilize technology and digital methods to deliver stimulus payments from the government more efficiently in a time of crisis, I would like to take this opportunity to provide recommendations and provide lessons MoCaFi has learned in our effort to serve individuals not currently served by our existing financial system.

 

MoCaFi supports the focus of today’s hearing and the efforts of the Committee and believes the federal government can play a critical role in addressing the needs of the unbanked and underbanked in our country. However, we challenge policymakers to envision a new approach that can provide a 21st century solution to problems that have existed for generations. We are working as a partner with existing financial institutions to help solve intractable problems. Despite everyone’s best efforts, some communities – particularly communities of color – remain very difficult to reach. The implementation and delivery of CARES payments highlights these challenges and points a way toward a better future with more opportunity.

 

Traditional financial models do not lend themselves to high volume, low dollar transactions that would be the norm as communities enter the banking system.

 

We, and other financial technology companies are able to help reach those communities. Financial technology companies can lend their technology and customer base, while banks can provide the licenses and regulatory infrastructure to support this customer base.

 

Another benefit of these partnerships is that banks would not be forced to create a separate subsidiary to handle services for the unbanked and underbanked community. Creating separate subsidiaries would only add costs to a segment of the market where banks do not want to play and do not make any money.

 

Government can also play a critical role in providing the right incentives for financial technology and traditional institution partnerships. The government can allow Community Reinvestment Act credit for these partnerships. One of MoCaFi’s key tenets, that we bring with us to these partnerships, is to help people build their credit. Our innovation is to make it easy for anyone to have their monthly rent payments added to their credit score. We give people a free option to have their monthly rent payment history delivered to two of the three credit bureaus. We are working to report these payments to all three bureaus by the end of the year. Some individuals experience a 30-50 point increase in their score within 60 days of using this service. This new platform, working in concert with the Federal government when appropriate, can put tools in place to ensure universal access to low cost, high quality banking products.

 

As traditional banks partner with companies like ours, we can help to close the banking gap in vulnerable communities. These platforms come with little cost and allow anyone with a smartphone to enter into a financial system that can provide opportunity to all.

 

We face many challenges as a nation. However, we also have a unique opportunity – one highlighted by the recent pandemic, economic dislocation, and civil unrest that have had an outsized impact on underserved communities — to bring millions of people into a banking system that works for everyone. This newfound strength will create wealth-building opportunities for our communities, enable people to save time and money by being able to bank more efficiently and begin to level the playing field regarding access for all people. The power sits with each of you today to move us closer to achieving true financial inclusion.

 

Thank you again for this opportunity, I look forward to working with the committee in the future.


1 https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/08/26/ferguson-other-us- suburbs-see-poverty-rise

2 2013 FDIC National Survey of Unbanked and Underbanked Households

3 2017 FDIC National Survey of Unbanked and Underbanked Households

4 Holder, Sarah (2019-06-04). “Why Cleveland Wants to Bring Back Postal Banking”. CITYLAB. The Atlantic Monthly Group. Retrieved 2019-06-05.