Originally posted at: www.americanbanker.com
By Kevin Wack
Despite years of encouragement by their regulators to provide small-dollar loans to people without access to traditional forms of credit, banks largely remain reluctant to enter the field.
At a congressional hearing Thursday, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency could point to little progress on the issue since 2009.
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If banks are considering entering the small-dollar loan business, they will also need to pay close attention to a number of innovative firms that are providing an alternative to payday lenders.
For example, Flexwage Solutions LLC offers a product that makes available wages that workers have earned but not yet been paid. Customers pay a flat fee for the predisbursement of their wages. Because there is no loan, they have nothing to repay.
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