Lack of financial institution innovation hurting underbanked

Ryan Gilbert, CEO of credit-for-bill payment solution BillFloat, offered a call to action for banks that aren't being innovative in their accommodations for the underbanked. Gilbert spoke at a recent House Financial Services Subcommittee on Financial Institutions and Consumer Credit hearing, explaining the economic downturn has U.S. banks lowering the amount of credit available, and alternative options besides just short term lenders need to be considered. He explained that many larger banks are afraid to lend to worthy consumers and suggested that financial services innovators work with Congress to pass legislation which he called "innovation enabling," to introduce new products that would not require reliance on banks. "We are not asking for any federal funding, loan guarantees, or any other handouts," Gilbert said. "What we would like is a much needed and welcome platform on which financial services innovators will be encouraged to flourish." Gilbert alluded to one initiative the Federal Financial Services and Credit Companies Charter Act of 2011, introduced in May by California Congressman Joe Baca. According to Baca's website, the charter would allow qualifying financial services companies to provide additional credit product options for underbanked consumers and small businesses. It would also require charter members to develop financial literacy programs to improve consumer credit reports.