Long reads

Financial trauma impacts huge population of underserved in society

Scott Hamilton

Scott Hamilton

Contributing Editor, Finextra Research

Connie Davis, founder and CEO of Kairos Digital Commerce Consulting, is concerned about what the ‘shadow financial system’ of payday loans and other services like them means to the underbanked, over both the short and long terms. She points out that research from many authorities has shown a direct link between emotional health and financial health.

“What we've learned is that there is a very strong tie between the underbanked/underserved (financial products) market and the trauma-impacted population in this country.” This sector of society takes many forms, from the unemployed or underemployed in lower income communities, to senior citizens requiring assistance from others to handle their banking duties, for example. And victims of domestic abuse and human trafficking, both in the past and at present, are high on the list of the financially-ignored, unaware, abused, or in crisis, as well.

With a background managing and promoting digital technology for financial service companies and fintechs in previous roles with FIS and other firms, Davis is one of a growing number of leaders searching for meaningful, transformative ways to open up these previously closed or inaccessible avenues to financial education and opportunity for people. “Financial trauma is what we're focused on [at Kairos]. And the relationship that people have with money is what is tied to how they manage their money and the mental health patterns that they have around the money.”

Ironically, Davis says, “digital transformation in our financial industry is not helping us it's hurting us”, when it comes to truly understanding – and serving - the forgotten or traumatised members of society. That’s because many of these people might not even know how to engage in online banking, or possess only rudimentary knowledge, awareness, or comfortability with new digital approaches that are quickly replacing in-person branch bank networks. They’re behind the latest banking trends, and falling further behind every day.

Davis points out that fixing this problem, turning those negative emotional and financial patterns and lack of access to affordable options around, is a multilayered challenge. But it’s one that she says can, and should be embraced by the industry. Davis wants financial institutions (FIs) to really try (beyond typically rudimentary efforts) to ‘see’ their customers, be able to detect if they’re under stress, duress, or potentially criminal abuse. She believes FIs can and must educate themselves and their frontline staff on the problems – and opportunities – that they can play a pivotal role in solving for people struggling to keep their financial and emotional affairs in order.

“We need to create…diversity of quality and inclusion initiatives for that [financial services] industry. How do [we] create safe banking spaces so when people do come into a branch, if they're exhibiting symptoms of financial coercion and control, because a human trafficker [is] standing outside or who won't allow them to speak, or someone is accompanying an elderly person, or a young woman who is under the control of an abuser? How do you detect that? How do you separate them out? How do you add a flag to their account? Those are called safe banking recommendations.”

Kairos will soon be launching a program, which Davis says is “the first of its kind to actually bridge trauma-informed training for bankers specific to retail bankers, you know, account managers, tellers, etc. Even digital banking call centers,” will be included as targets for the company’s new learning management system.

“The experts, the researchers that say these are the things you need to look for, so that we can make that education and curriculum available for the bankers and the financial technology companies. [With Kairos’ educational tools] they can start augmenting the digital journeys that have to occur in order to see trauma - or in order to predict it because it couldn't be seen."

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