“It Depends”: How Discretion in the Financial System Contributes to Exclusion and Marginalization
Access to banking and credit are important tools in overcoming poverty. But studies have shown that bias plays a role in the banking system, which may impact consumers most in need of financial services. This project will gather in-depth, qualitative information about the impact of decision-making among front-line financial service employees. Employees that regularly interact with consumers in financial service institutions make many discretionary decisions, such as charging overdraft fees, which have been shown to be biased. In turn, biased decisions can further marginalize low income consumers and consumers of color and mitigate the benefits of anti-poverty programs. Ensuring that consumers can continue to engage with and trust their financial institutions is paramount in preventing and alleviating poverty.
The researchers will interview dozens of financial service employees in Southeast Michigan, focusing on a daily narrative of experience and decision-making. Afterward, the interviews will be used to design a study to test the impact of discretionary decisions on the consumer. The aim of the study is to provide policymakers, consumer advocates, and financial service professionals with the information they need to revise consumer protections and ensure equal banking access.
Terri Friedline, U-M School of Social Work