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This article analyzes a demonstration program mounted by a major bank to understand whether access to information and communications technologies, combined with financial literacy training and training on how to use the Internet, can help low- and moderate-income individuals in inner-city neighborhoods be more effective financial actors. While quantitative analysis turns up few significant program effects, qualitative work implies that implementation issues likely compromised the effectiveness of the program. There was evidence of a potential link between information and communications technologies and financial literacy. Overall, urban low- and moderate-income individuals are interested in becoming technologically and financially literate and an intensive intervention may enable these goals.
Electronic banking technologies have proliferated in recent years, and the availability of a wide range of products has led to increasing adoption among consumers. These technologies include direct deposit, computer banking, stored value cards, and debit cards. Banks and other financial institutions have worked hard to develop and deploy these technologies because of their potential to increase efficiency, cut costs, and attract new customers. Consumers are attracted to these technologies because of convenience, increasing ease of use, and, in some instances, cost savings (Anguelov et al. 2004). Electronic banking, in particular, has grown at impressive rates. Between 1995 and 2003, e-banking increased eightfold (Hogarth and Anguelov 2004). Between late 2002 and early 2005, use of online banking increased 47 percent. There is some evidence that computer banking is associated with better household financial management (Hogarth and Anguelov 2004). However, financial literacy, the digital divide, and other issues that separate disadvantaged groups from the financial mainstream make it difficult for low- and moderate-income (LMI) individuals to reap the potential benefits associated with computer banking.
This article analyzes a demonstration program (the Program) mounted by a major bank (the Bank) to understand whether access to information and communications technologies (ICT), combined with financial literacy training and training on how to use the Internet, can help LMI individuals in inner-city neighborhoods be more effective financial actors. When we began the study, our primary research question was to examine whether technological literacy could serve as a gateway to financial literacy. secondarily, we wanted to investigate whether the Program could serve as a model to incentivize banks to engage more fully in the...