The Consumer Financial Protection Bureau announced today its interest in entering the field of mobile financial services and the launch of an inquiry seeking information from the public on the topic.
The Bureau’s inquiry specifically focuses on how mobile banking can be used to improve the financial lives of underserved consumers, a segment which may include younger populations, those with low income or those who live in locations without easy access to traditional banking. These consumers often rely on nonbank services, such as payday loans or check cashing, to meet their financial needs, the CFPB said.
“A recent FDIC study found that the ‘anytime, anyplace’ nature of mobile financial services offers the potential to help more people gain easier access to the banking system and grow their financial capability,” CFPB Director Richard Cordray said in prepared remarks for a field hearing in New Orleans. “Mobile phones are quite prevalent among many of these consumers, who may use these devices in lieu of computers.”
Because of the prevalence of cellphone use, the CFPB is looking at ways mobile technology could expand access to banking and is seeking information on whether using mobile devices opens up options in financial services and money management for underserved consumers, and whether these options are cheaper than traditional financial services.
Cordray pointed to tens of millions of Americans falling into two categories: unbanked or underbanked. But the CFPB is looking to focus on a broader category of consumers who are “underserved.”
“They are hard-working people living from paycheck to paycheck and waging a constant struggle to make ends meet,” Cordray said. “They often are younger. And they may also face particular accessibility issues – such as consumers who are disabled or who live in certain areas.”
In addition to focusing on improving the financial lives of underserved consumers, the Bureau is seeking information on other topics related to mobile financial services, including real-time money management, customer service and privacy concerns and data breaches.
According to a Federal Reserve study, 69 percent of mobile banking users said they checked their account balance before making a large purchase and half of them decided not to make the purchase after reviewing their balance or credit limit. With this in mind, the CFPB is seeking information on how mobile products and services can be a tool to help consumers manage their money in real time when making spending decisions.
When using these mobile services, however, consumers may find it harder to access customer service when an error occurs or when something goes wrong, which is prompting the Bureau to seek information on what types of customer service or technical assistance are available for mobile banking customers.
As with many Internet- and mobile-based services, mobile banking also requires safety precautions as customers may face particular privacy concerns. The CFPB is asking the public what kind of information companies are collecting on consumers, whether it is being disclosed to consumers, and how that information is being used for low-income consumers, specifically.
“In these ways, you will help us decide how we should focus our efforts to better serve and protect consumers,” Cordray said in prepared remarks. “As New Orleans’ native Wynton Marsalis once said, ‘We always hear about the rights of democracy, but the major responsibility of it is participation.’ So we hope that as many people as possible will take part by responding to our Request for Information.”
The Request for Information can be found here.
Written by Emily Study