Can't Stop, Won't Stop
Posted by Samira Rajan @November 2 2019
Pictured left to right: José Quiñones of Mission Asset Fund; Lily Lopez of Citi Community Development; Diana Mejía of Youth Policy Institute; Claudia Fernandez of Brooklyn Coop
One of our Loan Officers, Claudia, represented Brooklyn Coop at a Financial Inclusion Forum in Mexico City. She writes of her experience here.
Last week, I had the honor to represent Inclusiv and Brooklyn Cooperative at the Financial Inclusion Forum in Mexico City, MX. The forum was organized by the Mexican government, Citibank & other nonprofit organizations that offer financial services to migrant communities in the US. Topics included financial literacy, remittances, and digital payments. My panel focused on how credit unions create opportunity, wealth-building, and resilience by offering fair and affordable financial services. My favorite topics! My passion allowed me to overcome the nerves of public speaking. On the panel, I focused on credit unions’ collaboration with The Mexican Consulate & the “Ventanilla Financiera” (financial window) in New York and whether that model might be replicated in other US cities.
Throughout the forum, a couple of topics caught my interest. One was the high importance of digital payments in Mexico where there are more cell phones than bank accounts! Only 24% of the population has a bank account. Lowering the cost and increasing the reliability of both remittances arriving from the US to Mexican families and payments between individuals in Mexico are hugely important. The private sector in Mexico is testing payment via phone, which is available already in India and Nigeria. Creativity and app development is the way to go.
A beta test for a remittances card was discussed. Families in rural areas in Mexico can access funds from the US through the card via an ATM. Some need to travel long distances to get to an ATM and the card can’t solve that, but no bank account is required and the card can also be used in supermarkets, convenience stores, doctors offices, etc… .
Last, I enjoyed learning about financial education and inclusion around the world. Research by The Global Financial Literacy Center in Washington DC was fascinating. I encourage you to take a look. They found that only 57% of Americans pass a basic financial literacy test VS 32% of Mexicans. The test consists of three questions to keep it simple and it measures: 1. Understanding of interest compounding; 2. Understanding of inflation; and 3. Understanding of risk diversification. Here are the questions. Test yourself, have fun!
1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
More than $102, Exactly $102, Less than $102
2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?
More than today, Exactly the same, Less than today
3. True or False. “Buying a single company’s stock usually provides a safer return than a stock mutual fund”.
*answers are More than $102, Less than today, False.
Samira Rajan is the longest-serving employee of Brooklyn Coop and currently the Director of both the credit union and Grow Brooklyn. She started here as an Americorp*VISTA for a single year of service back when we were Bushwick Coop in 2001, got hooked by the challenge of building a community financial institution, and hasn’t left.