Alternative Data Tops the List for Treasury Department ‘Financial Inclusion’ Strategy

Financial infrastructure in the United States is best-in-class, but access to mainstream financial services remains uneven. Work is underway to identify solutions for underserved communities, an effort that was on full display at a recent gathering of the Financial Literacy and Education Commissions (FLEC).

There, officials formally unveiled their inaugural “National Strategy for Financial Inclusion in the United States,” laying out a public policy roadmap to bring more consumers into the financial mainstream.

Among the five objectives identified in the plan, the Treasury Department puts forward a robust outline for increasing access to safe and affordable credit. That objective includes a recommendation that “government agencies… collaborate to integrate consumer-permissioned alternative data into credit scoring and credit underwriting models.” The strategy describes this as an opportunity to connect consumers with “safer and more affordable credit opportunities for those who currently have no credit history or limited credit history.”

TransUnion has long supported the inclusion of alternative data – like rent payments or utility bill payment – on the core credit report. Allison Shuster, Head of U.S. Government Relations for TransUnion, was invited to join the FLEC meeting in a show of support for the initiative. She said the plan’s release marks a clear bipartisan push for financial inclusion that is likely to persist when a new Congress and a new administration come to Washington next year.

“We’ve seen significant interest from lawmakers who recognize the power that alternative data brings to bear,” Shuster said. “The Credit Access and Inclusion Act is the clearest example of that support, with prominent leaders from relevant House and Senate committees championing the bills. Now we have another proof point from the current Administration that this is a priority. That’s hugely promising for all of us working to safely bring more consumers into the financial mainstream.”

While the strategy is not set in regulations or in statute, it provides a clear outline for relevant stakeholders in government, advocates and the private sector to support underserved communities, whether that means rural America or low-to-moderate income individuals.

The Financial Literacy and Education Commission is tasked with developing a national financial education web site and a national strategy on financial education. It is chaired by the Secretary of the Treasury, while the Director of the Bureau of Consumer Financial Protection serves as Vice Chair.

“Financial inclusion is core to the message of ‘Information for Good,’” said Shuster. “We greatly appreciate the invitation to this important event. TransUnion will continue to lend support and offer our unique insights on how best to move forward.”