LAWRENCE — University of Kansas and University of Michigan researchers will lead a project to build a web-based, interactive map showing where financial services are located in communities across the United States and how the locations of these services affect individuals’ financial opportunity.
The project, known as Mapping Financial Opportunity, will provide a tool that policy makers at all levels, regulators, consumer advocates, families and others can use to search by ZIP code and learn more about the financial opportunity within their communities. Terri Friedline, assistant professor of social welfare and director of financial inclusion in the Center on Assets, Education and Inclusion of KU’s School of Social Welfare, and Mathieu Despard, assistant professor of social work of the University of Michigan, will lead the project, along with KU's Institute for Policy & Social Research, funded by a $240,000 grant from MetLife Foundation.
The project will use GIS software to determine the concentration of financial services such as banks, credit unions, payday lenders and post offices within a community. It will also show the kinds of services that banks offer, such as free checking accounts, any required minimum balances, ATM and overdraft fees and more. Combined, the information will help illuminate the availability and quality of communities' financial opportunity.
“Too many people do not have access to the safe and affordable financial products and services that they so desperately need to manage their financial lives. And we think that it makes a difference whether people have access to these products and services in the communities where they live," Friedline said. "We want to look at how financial services within communities can relate to their residents' financial health.”
Mapping Financial Opportunity, which is set to be online by the end of the year, will provide insight into how financial services in communities relate to their residents' abilities to save money, pay bills and access credit. By showing where financial services are located, the map will show how an array of financial services enables or hinders individuals’ financial health. The project will also examine whether the locations of post offices can provide residents with greater financial opportunity.
“MetLife Foundation is proud to support this ground-breaking tool, which pairs GIS technology with community-level financial data to identify the availability and accessibility opportunities of financial services in a particular ZIP code,” said Evelyn Stark, assistant vice president, MetLife Foundation.
Friedline and Despard will build the map using GIS and financial services data from numerous sources, including the Federal Deposit Insurance Corporation, Federal Financial Institutions Examination Council, Credit Union National Association, National Credit Union Administration, U.S. Department of the Treasury’s Community Development Financial Institutions and the U.S. Postal Service. They will link these financial services data to data on individuals' financial health using the Center for Financial Services Innovation’s Consumer Financial Health Study and the FINRA Investor Education Foundation’s National Financial Capability Study.
Designed in partnership with New America in Washington, D.C., the project will be of value to city governments that are working to increase the availability of safe and affordable financial products and services by expanding Bank On coalitions and Community Development Financial Institutions (CDFIs). The project will also provide insight into the potential effectiveness of offering financial products and services through the U.S. Postal Service, which has become a popular national policy proposal.
The developers hope to update the data on the map every few years to reflect community changes.
The importance of community influence on an individual’s financial opportunity and health is a growing field of study. Even though society is more mobile than ever, where people grow up or even live for a short period of time can make a difference.
Friedline recently published research showing that where a college student grew up is a greater predictor of whether they carry credit card debt than family factors or financial education.
In other research, Friedline found that an individual tends to use payday lenders more often when these lenders are concentrated in their community.
Mapping Financial Opportunity will empower greater analysis of a community’s financial health and how future decisions can help guide future policy. The map will give a community’s ratings, based on available data, of how well they may be able to facilitate residents' financial health based on their available financial services including banks, credit unions, payday lenders and post offices.
“We want this map to give a comprehensive picture of financial services available in a community and link those services to overall financial health,” Friedline said. “We hope to be able to show not only where these services are located and how they serve the community, but how that distribution of services may impact, on average, individuals’ financial health.”