ConnectHome Nation Webinar Using the Community Reinvestment Act to Close the Digital Divide Presenters : Jordana Barton, Senior Advisor, Federal Reserve Bank of Dallas Yolanda Davila, Texas Community Relations Executive, BBVA September 26, 2017
Closing the What is CRA? Digital Divide Digital Divide Best “Closing the Digital Divide: A Practices Framework for Meeting CRA The Case Obligations” Opportunity Case Study Role of Banks 2
What is the Community Reinvestment Act? What is CRA? Digital Divide ▪ A law that encourages banks to make loans and investments and Best provide services in low- and moderate-income (LMI) communities. Practices ▪ Passed in the 1970’s to address redlining— the denial of credit to The Case individuals based on where they live. Opportunity ▪ Lending, Service, and Investment Tests. Case Study Role of ▪ Intended to be broad, flexible and responsive to changes within Banks communities. ▪ Every year CRA helps bring over $100 billion in capital to LMI communities across the country. 3
2016 Interagency Question & Answer What is CRA? Digital Divide ▪ Broadband is included as a form of infrastructure investment — an Best essential community service. Practices ▪ Under the CRA service test, banks should show evidence that their The Case “alternative delivery systems” using online banking and financial technology are being adopted and are effective in providing services to Opportunity LMI individuals. Case Study ▪ Economic development: Role of ➢ Workforce Development, already an integral part of CRA; added Banks workforce development/job training examples. ➢ Small Business Development, already an integral part of CRA; added an example of supporting technical assistance for businesses in the use of technology. 4
Broadband: A Platform for all Areas of CRA & Community Development What is CRA? Digital Divide ▪ Essential Infrastructure Best Practices ▪ Workforce Development and Education The Case Opportunity ▪ Access to Financial Services Case Study ▪ Small Business Development Role of Banks ▪ Affordable Housing ▪ Health Care 5
The Internet Economy and Workforce Development What is CRA? Digital Divide Best Practices The Case Opportunity Case Study Role of Banks 6
Workforce Development What is CRA? Digital Divide ▪ Digital skills & access to broadband required for accessing Best jobs & training. Practices ▪ 70% of jobs are posted online. The Case ▪ Job training programs increasingly offered online. Opportunity ▪ 8 in 10 middle skills jobs require digital skills (32% of labor Case Study market demand). Role of Banks ▪ Digitally intensive middle skills jobs have grown twice as fast as other middle skills jobs in the past decade (higher wages). ▪ The skills mismatch in the expanding digital economy. 7
The Homework Gap What is CRA? Digital Divide ▪ 1/3 of households with Best incomes below $50,000, Practices with school age children, The Case do not have high speed internet access at home Opportunity (40% of all families with Case Study school-age children). Role of ▪ Only 8% of households Banks with incomes of $50,000 or more lack broadband at home. 8
Access to Financial Services What is CRA? Digital Divide ▪ More and more banking services are now available Best without making a trip to a branch — online banking, Practices mobile banking, remote deposit. The Case ▪ 61 percent of total internet users bank online (Pew, 2013). Opportunity ▪ 43 percent of adults with mobile phones and bank Case Study accounts reported using mobile banking, an increase of Role of 4 percentage points from the previous year (Federal Banks Reserve System, 2016). ▪ Total number and density of banking offices declined during the post-2008 Great Recession (FDIC, 2015). 9
Access to Financial Services (Cont.) What is CRA? Digital Divide ▪ Impact of technology strongest among younger Best consumers Practices ▪ Branch transactions have declined — 1993-2012 teller The Case transactions per office declined by 45 percent Opportunity ▪ Paper checks fell from 43 percent of non-cash payments Case Study to 15 percent (2003-2012) (FDIC, 2015) Role of ▪ Opportunity for Innovation: Mobile financial services Banks are found to help banks address many of the core financial services needs of underserved consumers (FDIC, 2016) 10
Identifying Best Practices What is CRA? Digital Divide Best Practices To achieve success, it is critical to invest in The Case community programs Opportunity that include all of the Case Study “three legs of the stool” Role of of broadband adoption. Banks 11
Broadband is Essential Infrastructure and the Prerequisite for Closing the Digital Divide What is CRA? Digital Divide Best Practices The Case Opportunity Case Study Role of Banks 12
Best Practices What is CRA? ▪ When there is an opportunity, banks can blend or layer the types of Digital Divide investments they make in broadband to include the “three legs of Best the stool”. Practices ▪ Measure outcomes to identify what works. The Case ▪ Digital inclusion programs need to consider the barriers to adoption people experience. Opportunity ▪ Training programs for youth and adults should cover the subject of Case Study internet safety and security. Role of ▪ Communities should consider the internet speed that will meet their Banks economic development goals. ▪ Local governments should create their digital inclusion plans as part of their economic development plans. 13
Tips for Preparing Your Case What is CRA? Digital Divide Part four of the new Best publication includes: Practices ▪ Helpful tips on preparing The Case your case Opportunity ▪ A overview of critical Case Study sections of the CRA Q&A Role of ▪ A list of CRA Reference Banks Guides Source: “Closing the Digital Divide: A Framework for Meeting CRA Obligations” 14
Telling Your CRA Story What is CRA? Digital Divide Part five is a template your Best financial institution can use to Practices tailor its own community The Case development story and Opportunity recognize ways to demonstrate leadership, responsiveness, Case Study and innovation. Role of Banks Source: “Closing the Digital Divide: A Framework for Meeting CRA Obligations” 15
What is CRA? Digital Divide Best Practices Identifying Opportunity The Case Opportunity Understanding the “Performance Context”: What are some ongoing projects to close the digital divide in the community? Case Study Role of Banks 16
Who does not have access? What is CRA? Digital Divide Best Practices The Case Opportunity The likelihood that a household has a broadband Case Study connection varies greatly depending upon its location. Role of Banks 17
Digital Opportunity for the Rio Grande Valley (DO4RGV) What is CRA? Digital Divide Of the 381 Best metropolitan areas Practices in the U.S., those The Case with the lowest Opportunity rates of computer Case Study ownership and Internet use include Role of Banks three Texas border metro areas. 18
Digital Opportunity for the Rio Grande Valley: The Role of Local Governments What is CRA? Digital Divide ▪ A community-led initiative to design Best and implement an effective Practices replicable model for closing the digital divide in the Rio Grande The Case Valley on the South Texas Border. Opportunity ▪ A middle mile, inter-governmental network demonstration project with Case Study Pharr-San Juan-Alamo School District (PSJA) and the City of Pharr. Role of Banks ▪ A digital inclusion program at PSJA for parents and students. ▪ 2017- Two new ConnectHome PHA’s on the border become part of the DO4RGV 19
Project Goals What is CRA? Digital Divide ▪ Improve educational opportunity Best and results for Pre-K through 12 Practices grade students and their families The Case across the Rio Grande Valley region (close the "homework Opportunity divide"). Case Study ▪ Improve access to workforce Role of opportunities, including training Banks and job opportunities. ▪ Improve access to healthcare and telehealth/telemedicine. 20
Project Goals (cont.) What is CRA? Digital Divide ▪ Improve access to the Internet and Best online marketing for entrepreneurs Practices in the region and increase the ability The Case to attract business. ▪ Improve access to financial services Opportunity and online banking. Case Study ▪ Improve financial literacy through Role of access to the BBVA Compass Banks Financial Literacy Program including mobile and online banking. ▪ Develop a replicable model for expansion across the border region. 21
Working Paper on Financial Inclusion in the U.S. What is CRA? Digital Divide ▪ Studied impact of internet Best access on unbanked & Practices underbanked low-income The Case consumers ▪ Internet access has the Opportunity potential to increase the Case Study number individuals with a bank account by 10% Role of Banks ▪ 2013 FDIC National Survey: 50% of unbanked households do not have internet access Source: Technology, Opportunity & Access: Understanding Financial Inclusion in the U.S. 22
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