SEPTEMBER 2018

USA
Testing ways for
credit unions to tackle
financial exclusion
among minorities
The Filene Research Institute has
published a report on how credit unions
and community banks can help more
minority households who are suffering
from financial exclusion.
Government figures show that 45.5%
of Hispanic and 49.3% of African
American households were unbanked or
underbanked in 2015. Only 18.7% of white
households fall into these categories.
Minority households are also twice as
likely to live in asset poverty, compared to
white households.
Together with partners Ford Foundation
and Visa, Filene launched the Reaching
Minority Households incubator to develop
financial products.
Five financial products were identified
and tested across five financial
institutions. These were: loans for noncitizen
members; data-mining techniques
to identify households that could benefit
from an auto-loan refinance; small-dollar
loans based on relationship factors other
than credit score that relied on rapid
underwriting and disbursement via
a mobile application; small-business
microloans to entrepreneurs; and loans
to consolidate high-rate payday loans into
one affordable payment.
The tests found that serving financially
vulnerable populations starts with having
the right mind-set. However, serving
minority households requires an approach
tailored to the needs of the individual
community served by each credit union.
The institute highlighted that such
programmes should not stand alone but
be part of a suite of services for those
financially vulnerable.
Another finding suggests that credit
unions need to look beyond traditional
measures of creditworthiness such
as credit scores to determine which
customers are a good fit for their product.
Filene also noted that charging higher
rates to vulnerable populations based
on credit risk can often be necessary to
ensure financial sustainability.
Accompanying this report is one credit
union member’s personal story of how
she started her own business with support
from Point West Credit Union in Portland,
Oregon. Sara Rodriguez obtained a US
$500 business loan from her credit union
in spite of the fact that she didn’t have a
social security number. This financial
support enabled her to start her own
business, now a thriving enterprise.
Report author George Hofheimer, said:
“Providing products like those tested in
the incubator program can be a win-winwin
for the customer, financial institution
and community.”
PARAGUAY
Paraguay launches technical baccalaureate in co-operatives
p Ariel Guarco joins officials at the launch
The Federation of Paraguayan
Co-operatives (FECOPAR) has launched a
technical baccalaureate in co-operatives.
The BT Coop qualification will be taught
at the National School of Commerce and
was launched last month at a ceremony
featuring Ariel Guarco, president of the
International Co-operative Alliance.
The three-year curriculum is in line
with co-operative values and principles.
Students will learn about the management
of co-ops take internships in preparation
for a career in the sector.
It is hoped the baccalaureate, the result
of an agreement between the federation
and the Ministry of Education and
Sciences, will also help to shape young
people into responsible citizens.
Initially, a pilot project will enrol
29 students and once the first cohort
graduates, the federation plans to work
with other schools and colleges to expand
the course.
The Paraguayan constitution says co-op
principles must be disseminated through
education as an instrument of national
economic development.
“From the International Co-operative
Alliance’s perspective, having cooperatives
included in the educational
curriculum is a priority,” said Mr Guarco.
He added that the fifth Co-operative
Summit of the Americas, due to take place
in Buenos Aires on 23-26 October, would
feature a forum on co-operatives and the
educational system.
“The objective of this forum is
developing a collaborative network that
would facilitate initiatives in each country
to incorporate content on co-operatives in
all-level curricula,” he said.
The event will feature a virtual
exchange, with participants sharing
their experience remotely and discussing
the documents that will come out of
the summit.
“We have the responsibility to promote
the idea that all children and young people
must know that there are other ways of
organising ourselves, that there is not a
single way to provide ourselves with food,
to get work or to promote development,”
added Mr Guarco. “They should know
that there are alternative paths and that
co-operatives are one of these.”
SEPTEMBER 2018 | 17