COVID-19 widened the wealth gap and revealed several economic realities, vulnerabilities and inequities that make achieving financial health more difficult. As a result, some people are faring better than others a year into the pandemic.
Recent research from Fiserv found 29 percent of Gen Z and millennials had missed a mortgage, rent or bill payment as a result of the pandemic, compared to 19 percent of all consumers. And a Pew Research Center report found several indications of financial difficulties – including job loss, dipping into savings and visiting food banks – were more common among adults with lower incomes, those without a college degree and Black and Latinx Americans.
The pandemic has amplified the struggle many people face in achieving financial health, which is the ability to spend, save, borrow and plan for life. Many people encounter difficulties in accessing, understanding and using the tools and technology that can enable them to maximize their financial potential and optimize their financial health.
Fiserv is committed to doing our part to change that. We partner with organizations that help people gain the knowledge and skills to make effective and informed money-management decisions. And in 2020, Fiserv launched Back2Business, a program that is investing $50 million in minority-owned small businesses hit hard during the pandemic.
The past year has highlighted the importance of financial literacy. Especially now, increasing your financial acumen and committing to financial health and wellness can make a positive difference for families, businesses and our communities.
Many people face challenges in accessing, understanding and using the tools and technology that can enable them to maximize their financial potential and optimize their financial health.
Navigating the Financial Fallout of COVID-19
From the stock market to real estate, those with diversified assets and the ability to participate in a broader range of financial services fared better during the pandemic than those without. Generating wealth and, by extension, creating more opportunity in our communities, depends on increased access to financial services.
Mitsuhiro Furusawa, deputy managing director for the International Monetary Fund, calls financial inclusion the bridge between economic opportunity and outcomes. Financial inclusion also facilitates availability of useful, affordable financial products and services to individuals and businesses in underserved communities.
The pandemic created opportunities to think differently about how we deliver those products and services, and provided a basis to consider systemic changes, opening access to resources, capital and expertise to drive better outcomes. When Fiserv looked at building back, we knew we wanted to leverage our unique place in the financial ecosystem to build back stronger, more inclusive communities. Financial literacy and inclusion are a foundational component to that effort.
Building Back Main Street
For small businesses, financial literacy means many things, including knowing how to access funds, tap into government resources and connect to the technology needed to run a business, from maintaining inventories to managing payrolls and payments.
Showing up in the hardest-hit communities is at the core of our Back2Business strategy. We are committed to providing the expertise, resources, technology and solutions small businesses need to survive and thrive.
For example, Fiserv helped ensure small business had access to Paycheck Protection Program loans, often through minority deposit institutions in local communities. Securing these loans was critical for business owners, especially those without generational wealth or excess capital. Helping businesses access programs and funding is vital to ensure financial inclusion.
The more we can educate consumers about the fundamentals of financial literacy, the more we all benefit.
Technology's Role in Promoting Financial Wellness
Technology tools can help instill good financial discipline and position people to be prepared to take advantage of opportunities, including paying for college, purchasing a home or starting a business. For example, mobile apps and alerts help people better track their money and bills and potentially avoid overdrafts and fraud. Payments made in real time can help fend off late charges.
Technology can also automate savings. Goalsetter is a financial literacy platform that helps adults and children save toward specific goals by rounding up purchases and automatically depositing set amounts every week or month. Fiserv is partnering with the company to fund 1,500 new Goalsetter accounts for children in at-risk communities.
Developing strong financial habits can be difficult, especially if that knowledge isn't generational. Young people are starting behind the curve if they don't know about compounding interest, budgeting, investing and establishing credit. Resources such as Goalsetter help provide those early lessons in financial literacy.
Doing Well by Doing Good
Improving financial literacy and making good choices along the way improves the likelihood people can achieve their financial goals, whether it's owning a home, paying for college or financing a comfortable retirement. The more we can educate consumers about the fundamentals of financial literacy, the more we all benefit.
It's also about structural financial inclusion. Our communities are more vibrant when they have successful small businesses. Thriving small businesses and communities are the seeds for growth that produce better education systems, job opportunities and higher incomes. Those benefits accrue to businesses of all sizes. Big businesses have an active role to play, too. Our Back2Business program is a great example of how large companies can meet small businesses where they live and operate, providing access to technology and capital to support and uplift those businesses.
Companies are also investing in their employees' financial health as an investment in their workforce and the future of their businesses. People increasingly choose to work for and do business with companies that reflect their values. They want to see themselves reflected in an organization's mission and values, as well as in the products and services the company offers.
Providing the tools, technology and subject-matter expertise opens the aperture, shedding light on what's possible when we commit to doing well by doing good. We believe we'll all be better off when we're all better off.