COVID-19 has significantly disrupted the financial services industry, particularly by exacerbating preexisting barriers to inclusion within certain segments of populations. Deloitte investigates.
With this disruption comes the opportunity to expand market share and be a leader in responding to demands for innovative banking solutions accelerated by stay-at-home orders and social distancing protocols. Organizations should take advantage of the dramatic shifts wrought by COVID-19 to pause and consider a more prominent role for inclusion as part of their overall strategy in response to legislative priorities, stakeholder expectations, and economic incentive to do so, including social pressures driven by the global trend toward Environmental, Social, and Governance (ESG) initiatives.
Firms are racing to pivot their delivery models to meet changes in consumer behavior and demand, including by exploring innovative technological solutions and partnerships to expand their digital capabilities. However, longstanding barriers to inclusion for vulnerable populations continue to exist and have been further exacerbated by COVID-19. Financial services providers are therefore tasked with assessing strategic transformation initiatives to evaluate their impact on these populations, and to proactively address emerging regulatory compliance requirements associated with a renewed focus on equal access and fair treatment. These traditional barriers to financial inclusion, and COVID-19’s impact on them, are most evident in relation to the following populations: 1) the aged population, 2) rural communities, 3) persons with disabilities (PWD), and 4) other underserved groups. While there is significant overlap in the compounding of barriers to inclusion, the table below highlights some of the distinct concerns for each population.
AGED POPULATION
Traditional barriers to inclusion
- Potential memory and mobility issues
- Lack of experience with online tools
- Reluctance to transition from established products and services
How COVID-19 has exacerbated barriers
- Compounded the struggle to access banking services for populations more likely to engage in in-person banking
Regulatory concerns & other drivers
- Online banking is subject to the Americans with Disabilities Act (ADA) and lower adoption of mobile/digital banking presents challenges for some products
RURAL COMMUNITIES
Traditional barriers to inclusion
- Limited and/or unreliable internet access
- Far distance from closest physical branch locations
How COVID-19 has exacerbated barriers
- Pushed smaller community banks and credit unions to operate at reduced hours and/or capacity
Regulatory concerns & other drivers
- Modernization of the Community Reinvestment Act (CRA) assessments may shift the focus to where loans and deposits originate, potentially decreasing investment activity in rural area
By Todd Semanco & Chad Polen
About the authors: Todd Semanco is a Partner and the U.S. National Lead for the KPMG Banking Regulatory and Compliance Risk practice; Chad Polen is a Managing Director for the KPMG Banking Regulatory and Compliance Risk practice.
Download the full report here.
