The CFPB recently released a report regarding the use of Mobile Financial Services by underserved populations, including low-income, unbanked, underbanked, and economically vulnerable consumers. The report does not contain any findings or specific recommendations; rather, it is a summary of public comments received in response to the Request for Information issued in June 2014 by the Bureau’s Office of Financial Empowerment. While the report is lengthy, it contains some “key takeaways” in the executive summary and is a worthwhile read for those interested in a well-informed survey of the potential opportunities and risks mobile financial services present for the underserved.
The report does a good job of outlining the potential for mobile devices to improve financial planning and budgeting as well as reduce overspending and overdraft fees. It highlights some of the potential benefits offered specifically by the mobile ecosystem, including real-time payments capability and short message service (SMS) and push messaging alerts relating to consumers’ transactions, account balances, and fraud.
The report also draws attention to some of the risks presented by use and reliance on mobile financial services. For example, the report notes the costs involved in providing mobile financial services – both to financial services providers and to consumers. Despite the high percentages of underserved consumers with access to mobile phones and smartphones, as documented in the report, digital access remains a concern. The report also discusses how the mobile channel can present barriers to access for certain individuals, such as Limited English Proficiency (LEP) individuals and individuals with disabilities.
Given its focus on the underserved, it would have been helpful for the report to have included some discussion of lending products and potential fair lending risks presented by the use and proliferation of mobile financial services. Also, an international perspective would have been valuable, as there may be important lessons to be learned from the high usage of mobile financial services by the underserved in the developing world.
On November 16, 2015, Ballard Spahr attorneys conducted a webinar “Look Before You LEP – Getting Ahead of the CFPB’s Push to Deal with Limited English Proficiency (LEP) Customers,” which focused on the issues that institutions should consider when taking steps to serve LEP consumers. We also recently conducted a webinar in which we discussed digital accessibility for individuals with disabilities and Americans with Disabilities Act (ADA) enforcement in the mobile channel as emerging issues for financial services providers.