Banking the Underbanked: It's Harder than You Think
Last month, I had the pleasure of attending the Cities for Financial Empowerment (CFE) Fund's Bank On 2.0 Conference, Building a National Platform for Local Banking Access Programs. The Conference was held at the Newseum, which, if I can be honest, is the venue I want for all future events I ever attend. The conference facilities were beautiful, with a terrace overlooking Pennsylvania Avenue and a catering staff who knows their way around a kitchen (seriously, the hors d'oeuvres during the reception were amazing).
I came to the Bank On 2.0 Conference from somewhat of a different vantage point than the other 150 or so attendees, in that I don't work directly on a financial access initiative such as Bank On. Rather, I manage joinbankon.org, the online home for almost 80 of the Bank On programs that exist in communities across the country. While I learn a lot from talking with many of the Bank On program managers, I went to the Bank On 2.0 Conference hoping to get a better understanding of the challenges facing folks trying to connect un- and underbanked households with safe and affordable transaction accounts.
If I had to assess my conference experience, I'd consider my mission accomplished. Here were just a few of my takeaways about the challenges facing people working to expand financial access:
- Having a bank account means little if you can't access the bank. Prior to the conference, it was easy to imagine what a community without bank branches would look like: in my mind, it was a farm town in middle America where people are used to driving 30 minutes for services I take for granted in my urban neighborhood. What I didn't imagine was South Bronx, where, prior to Spring Bank, there were no bank branches in the community at all. Of course the underbanked population there is high—without a branch, having a bank account means relatively little. Unfortunately, South Bronx is not alone, as there are tens of dozens of communities across the nation where traditional banks simply do not exist.
- Having a bank account isn't the silver bullet. Access to a bank account (and a bank branch where you can interact with people who can help you use it) matters. However, in many cases, the account is one of many financial products that a financially vulnerable household needs to make ends meet. As the program manager from Bank On Houston pointed out, a lot of her clients can benefit from personal lines of credit that are small and affordable, but essential for weathering emergencies. But, at most banks, you'd have to know about products like these in order to get them, because they're not marketed like checking accounts, savings accounts or money markets. There are a host of products out there to help people be more financially secure, and it's important to know which is right for your clients.
- Having a bank account works best when paired with a relationship built on trust. As FDIC Chair Martin Gruenberg mentioned in his presentation, besides having a job, a relationship with a bank is one of the most important keys to financial success. Crucial here is the word 'relationship,' because one reason many people do not seek products and services from a traditional bank has to do with skepticism. If you don't trust the bank offering the account product—because of previous experiences, cultural differences and the like—then you don't want to take advantage of what it has to offer. Therefore, beyond simply having access, it's imperative that people have someone they feel they can go and talk to.
The title of this blog post suggests that there's more there than meets the eye when it comes to connecting financially vulnerable people with what they need to build a stronger financial footing. These challenges may not actually be surprising to the people who work on these issues day in and day out. But for me, I couldn't help but think time and time again during the Bank On 2.0 Conference about just how complex these challenges are, and how there is no one-size-fits-all approach to financial access.
For these reasons, I'm glad CFE Fund is taking on the task of identifying the next iteration of Bank On. So much more work remains to be done, and because of the strong foundation which the asset-building field has built together, I'm confident about the new directions in which we'll go.