Cities strive to bring fintech to underserved communities
As digital commerce grows, cities should keep in mind that the technology that has kept businesses up and running during the pandemic is available to underserved communities.
It has long been feared that digitally driven developments, such as cashless retail, will exclude underbanked consumers. The other side of this problem is that small businesses themselves could be left behind as their more powerful rivals adapt to new digital habits of consumers.
Digital payment technologies “are among the most timely and relevant solutions in company history,” said Melvin Coleman, executive director of the Atlanta Black Chambers. “They have allowed us to continue to do business and operate safely during a pandemic. Now that these improved processes exist, many consumers expect to use them in the future. It’s a whole new world now. . “
Atlanta Black Chambers is a nonprofit group of business, community and government leaders who advocate for sustainable black-owned organizations, including education and training programs. ABC is helping businesses deploy new technology, which during the pandemic often involved bringing digital orders, payments, and business management to traditionally physical operations.
This work is done against a background of racial divide in access to technology and a disproportionate impact of the economic recession. The number of active business owners fell from 15 million to 12 million in spring 2020, the biggest drop on record, according to the National Bureau of Economic Research, which found that black business owners suffered the biggest loss, with a 41% drop in the number of active business owners. Latinx business owners fell 32% and female business leaders fell 25%.
There is also a general technology gap that affects consumers, entrepreneurs of small businesses who often depend on their own personal technology and the ability of those owners to hire staff.
Research of Deutsche Bank Securities found that 76% of blacks could be excluded from 86% of jobs over the next 25 years due to a lack of access to technology. The five biggest tech companies in the United States could solve this problem by investing $ 15 billion in education and in projects to ensure wider access to technology. That’s less than 1% of the market capitalization expansion of the top five $ 2 trillion tech companies during the pandemic, according to Deutsche Bank Securities.
“The digital divide is still a reality. The gap is being bridged in business and entrepreneurship through innovative solutions that are available to everyone’s fingertips primarily through smartphones,” Coleman said, adding that he was “all for” the Federal Reserve Bank of Atlanta. Special Committee on Inclusion of Payments who will research ways in which the technology that has accompanied the mass shift online can inadvertently exclude parts of the population.
The Atlanta Fed committee, which includes companies in retail, government, financial services, and academia, will examine how to bring digital commerce to businesses and consumers who depend on cash – by looking at how to bring digital commerce to the businesses and consumers who depend on cash. focusing more on expanding fintech than increasing bank accounts. Both solutions are needed, according to Coleman.
“Given the phrase ‘money dependent people’, I believe I’m talking about the same people when I refer to the phrase ‘unbanked’ in the black community and society at large,” Coleman said. . Because this community does not participate in the financial system, driven by the technology deployed in the financial and retail markets, some goods and services may not be available to them or could certainly cost more, according to Coleman. “There is also a factor in the racial wealth gap,” he said.
Coleman and ABC focus on access to critical resources, such as training, relationships, and funding, educating new businesses about available online payment technology, as well as other merchant innovations.
“Opportunities exist, but access is denied due to poor preparation. I’m talking about books and records, required certifications, etc.,” he said. “That’s why training, relationships and mentoring are essential.”
In San Francisco, the impact of the pandemic on small businesses has been striking, with 50% of small businesses in the San Francisco Chamber of Commerce’s footprint closed to low in 2020, said Rodney Fong, president and chief executive officer of the San Francisco chamber. Trade.
There is some recovery, as there has been an increase in job vacancies in the restaurant business as restrictions have eased. Similar to cities like New York, there is actually a staff shortage for restaurants.
Advances like mobile orders and payments can help businesses recover and foster access to a larger community, according to Fong.
“Digital payment is the future. We see this economy growing in other cities and countries, and the best action we can take as a community is to ensure that we involve vulnerable communities in this transition,” said Fong.
The cost of doing business is higher in San Francisco than in most other cities. This poses an additional challenge in reaching underserved communities, according to Fong.
“It keeps our small entrepreneurs from getting started,” Fong said, adding initiatives such as those in San Francisco. Small Business Takeover Act are vital. The mayor’s program reduces bureaucracy and streamlines permits and access to finance with a focus on micro-traders and communities that have had difficulty accessing resources in the past.
“If we don’t, the digital device will only continue to develop,” Fong said. “San Francisco is a city of innovation, and as we look to new payment futures, we must do so with intention and inclusion.”