FinTech, Regional Productivity, and the Untapped Potential of Indian Country
A recent study by the Brookings Institution, a Washington D.C. based public policy organization, analyzed productivity across the United States at the local level via the nearly 400 metropolitan areas spread across the country. The think tank noted that rising productivity corresponds to job creation, wage growth, and improved living standards. In using the metric of “productivity,” the study focused on the individual output (expressed in dollars) of workers. Upon first glance, the results of the Brookings study did not spell a promising future for Indian Country.
Access to capital, workforce development, infrastructure deficits, and lack of local entrepreneurship are not new issues facing tribal communities. The Brookings study points out a distinct divide in productivity between large and small metro areas. The think tank chalks much of the difference up to the concept of agglomeration- the sharing of knowledge and specialization benefits multiplied by proximity. For Native Americans that are geographically, culturally, and economically isolated from large metros like San Francisco, Chicago, and New York, the study is yet another reminder of the massive hurdles facing tribal leaders to bring sustainable enterprises and capital to their communities.
However, the policy experts provide some hope for the future in Indian Country- a hope that is already paying dividends for NAFSA members. “Convergence” is the idea that smaller economies will ultimately close the productivity gap by mimicking the technologies and processes abundant in larger metro areas. Tribal communities embracing FinTech are already reaping some of the benefits of productivity convergence through online installment lending. NAFSA members are benefitting from the need and interest in sustainable and responsible small dollar lending products and reaching consumers across the United States via the internet. NAFSA member tribal lending entities are even buying out 3rd party service providers located in large metro areas and relocating jobs and productivity to tribal communities.
The tech boom has helped emerging cities like Austin, TX and San Jose, CA boast some of the strongest economies this century. With short term, small dollar loans expected to exceed $1 trillion in origination volume by 2050, NAFSA members are in prime position to take advantage of the productivity enhancements provided by the tech industry. The Brookings Institution laments that simple productivity boosts may not alone be enough to lift many regions out of poverty or bolster middle class incomes, but NAFSA members are seeing drastic improvements in community welfare and social programs from their lending enterprises. Indian Country’s ability to adapt and evolve to shifting pockets of productivity will highlight the potential for economic development in tribal communities in the near future. NAFSA is here to ensure that financial services and technology lead the way.
