Closing the Digital Divide: A Framework for Meeting CRA Obligations

Transcription

1 Closing the Digital Divide: A Framework for Meeting CRA Obligations Jordana Barton, MPA Federal Reserve Bank of Dallas-San Antonio Branch jordana.barton@dal.frb.org Net Inclusion Summit 2018 NDIA April 19, 2018

2 Disclaimer The views expressed in this presentation are the presenters and do not necessarily represent the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.

3 Like electricity a century ago, broadband is a foundation for economic growth, job creation, global competitiveness and a better way of life. It is enabling entire new industries and unlocking vast new possibilities for existing ones. It is changing how we educate children, deliver health care, manage energy, ensure public safety, engage government, and access, organize and disseminate knowledge. Federal Communications Commission

4 The Community Reinvestment Act (CRA) Federal law passed in 1977 to address redlining the denial of credit to individuals based on where they live. Encourages banks to make loans and investments and provide services in low- and moderate-income (LMI) communities. Intended to be broad, flexible and responsive to changes within communities.

5 2016 Interagency Question & Answer Q&A Guidance Broadband is included as a form of infrastructure investment an essential community service. Under the CRA service test, banks should show evidence that their alternative delivery systems using online banking and financial technology are being adopted and are effective in providing services to LMI individuals. Digital Inclusion: Workforce Development was already included in CRA. Digital skills, preparing workers for the digital economy; Closing the homework gap; attracting business/jobs Small Business Development was already included in CRA. Added an example to include supporting technical assistance for businesses in the use of technology Expanding access to financial services/access to capital for small business through digital technology

6 2016 Interagency Q&A Guidance To accompany the 2016 Q & A, the Fed published Closing the Digital Divide: A Framework for Meeting CRA Obligations to provide the Why and How for banks and their community partners. Visit: or

7 Types of CRA Contributions/Financing New Markets Tax Credits-NMTC for broadband infrastructure Interim Construction Loans Equity Investments Equity Equivalent Investments (EQ2) Low-interest loan to CDFI for a community loan fund Low-income Housing Tax Credits (LIHTC) Grants for broadband infrastructure (WiFi Mesh Networks, etc.) Grants for digital inclusion programs: Digital skills in workforce development, financial literacy/online & mobile banking, etc.

8 Broadband: A Platform for all Areas of CRA & Community Development Essential Infrastructure Workforce Development and Education Access to Financial Services Small Business Development Affordable Housing Health Care

9 What is the Digital Divide? The gap between people who have access to broadband services and know how to use the internet and those who do not have such access or knowledge.

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11 Who does not have access? Low-income households are less likely to have broadband access than high-income households.

12 Who does not have access? The likelihood that a household has a broadband connection varies greatly depending upon its location. Generally, metropolitan households are more likely to have broadband access than households in rural areas.

13 Mapping Cities and Counties: Who does not have access in Dallas? Federal Reserve Bank of Dallas, 2017

14 Identifying Best Practices To achieve success, it is critical to invest in community programs that include all of the three legs of the stool of broadband adoption.

15 Broadband is Essential Infrastructure and the Prerequisite for Closing the Digital Divide

16 Best Practices When there is an opportunity, banks can blend or layer the types of investments they make in broadband to include the three legs of the stool. Measure outcomes to identify what works. Digital inclusion programs need to consider the barriers to adoption people experience. Training programs for youth and adults should cover the subject of internet safety and security. Communities should consider the internet speed that will meet their economic development goals. Local governments should create their digital inclusion plans as part of their economic development plans.

17 Digital Opportunity for the Rio Grande Valley (DO4RGV) A community-led initiative to design and implement an effective model for closing the digital divide in the Rio Grande Valley on the South Texas Border. Pharr--A middle-mile (backhaul intergovernmental network) demonstration project in Pharr, TX will provide an adaptable and replicable model for a robust fiber optic network for the border. Digital Inclusion--Students and parents from PSJA provided with computers, home broadband access, bilingual training and technical support.

18 DO4RGV Project Goals Improve the ability to provide for public safety. Enhance educational opportunity and results for Pre-K through 12 grade students and their families across the Rio Grande Valley region (close the "homework divide"). Increase access to workforce opportunities, including training and job opportunities. Expand access to healthcare and telehealth.

19 DO4RGV Project Goals Improve access to the Internet and online marketing for entrepreneurs in the region and increase the ability to attract business. Enhance efficiencies for border trade. Improve access to financial services and online banking. Strengthen financial literacy through access to the Dallas Fed's Building Wealth and Navigate curricula, as well as partner programs. Develop a replicable model for expansion across the border region.

20 Workforce Development: The Future of Work is Here Technological advancements are transforming work Growth of automation & technological complexity are changing required job skills (i.e., manufacturing) E-commerce and the disruptions in brick and mortar retail Artificial intelligence advancements (augment labor replace labor) Remote models for provision of services (i.e., Telemedicine, Banking) Growth in contingent workforce (i.e., gig economy) 3D printing Self-driving vehicles

21 Workforce Development Digital skills & access to broadband required for accessing jobs & training 70% of jobs are posted online Job training programs increasingly offered online 8 in10 middle skills jobs require digital skills (32% of labor market demand) Digitally intensive middle skills jobs have grown twice as fast as other middle skills jobs in the past decade (higher wages) The skills mismatch in the digital economy

22 The Homework Gap 1/3 of households with incomes below $50,000, with school age children, do not have high speed internet access at home (40% of all families with schoolage children) Only 8% of households with incomes of $50,000 or more lack broadband at home

23 The Internet Economy and Workforce Development

24 Access to Financial Services More and more banking services are now available without making a trip to a branch online banking, mobile banking, remote deposit 61 percent of total internet users bank online (Pew, 2013) 43 percent of adults with mobile phones and bank accounts reported using mobile banking, an increase of 4 percentage points from the previous year (Federal Reserve System, 2016) Total number and density of banking offices declined during the post-2008 Great Recession (FDIC, 2015)

25 Access to Financial Services Impact of technology strongest among younger consumers Branch transactions have declined teller transactions per office declined by 45 percent Paper checks fell from 43 percent of non-cash payments to 15 percent ( ) (FDIC, 2015) Mobile financial services are found to help banks address many of the core financial services needs of underserved consumers (FDIC, 2016). Opportunity for Innovation.

26 Access to Healthcare: Telehealth Telehealth is the use of electronic information and telecommunication technologies to support and provide long-distance clinical health care and monitoring, patient and professional health-related education, and public health and health administration. Technologies include videoconferencing, the internet, store-and-forward imaging, streaming media and terrestrial and wireless communications.

27 Health Disparities on the Texas Border: Prevalent Diseases The prevalence of diabetes is estimated to be over 30 percent among Mexican-American adults residing near the U.S.-Mexico border (Kendzor, Darla E. et. al., 2014). Half of those with diabetes are undiagnosed, and over 55 percent are untreated. Untreated diabetes is common among patients admitted to the hospital for serious cases 56 percent of cardiovascular disease Highest rates of diabetes-related amputations.

28 Prevalent Diseases, cont. Among the Cameron County Hispanic Cohort, nearly 49 percent of the study participants were obese. Poor mental health has been linked to diabetes, obesity and limited physical activity. Almost 30 percent of adults experience a measurable level of depression and anxiety. Also linked to diabetes: Highest rates of tuberculosis in the nation with Maverick and Cameron counties exceeding 15 cases per 100,000 people. Tuberculosis in Texas averages 4.7 cases per 100,000 people.

29 Health Disparities: Limited Access to Healthcare Lower ratio of health care professionals (including physicians, dentists, physician s assistants, nurse practitioners, psychiatrists, and psychologists) Deep rural areas with long distances to facilities, overbooked community health centers. High uninsured population: Between percent of adults under age 65 in the border region are uninsured, compared to 26.8 percent in Texas. The uninsured population may delay receiving care until their conditions are more acute, often requiring costly emergency room visits. The Gateway Community Health Center, the Consulado Mexicano General de México/Ventanillas de Salud and the Kaplan College collaborate to provide free health check-ups to colonia residents at the Ein-Gedi Ranch in colonia Pueblo Nuevo, Webb County, TX.

30 Telehealth Initiative to Bridge the Urban- Rural Divide La Union del Pueblo Entero: Health on Wheels Mobile Clinics General Medicine Services Videoconferencing with Primary Care Physicians and Specialists Vision Screenings Health Talks UTRGV Medical Residents Other medical agencies

31 Community Health Workers Innovate in Reaching the Underserved with Technology Trust: Community Health Workers, Promotoras, can communicate and motivate effectively because they are from the neighborhoods, culture and community they serve. Promotoras and mid-level providers at the site for telehealth services.

32 Conclusion Income and wealth inequality are at the highest levels since the Great Depression. The top 3% account for 30.5% of all income and hold 54.4% of all the net worth. The Digital Divide creates a structural barrier to closing the income and wealth gaps and a barrier to LMI individuals ability to move up the economic ladder. The Gatsby Curve: The finding that greater income inequality is associated with diminished intergenerational mobility. Banks, local governments, nonprofits, and anchor institutions can work together to bring broadband access and adoption to rural and LMI communities.

33 Q & A Jordana Barton, MPA Federal Reserve Bank of Dallas jordana.barton@dal.frb.org Closing the Digital Divide