For many people – especially those of us working in the financial services industry – it can be difficult to understand why someone would not have a bank account (or if they do, why they would still use costly alternative financial services). Yet, legitimate and systemic reasons for a lack of traditional financial relationships offer a glimpse into the “why’s” behind our nation’s underserved communities.
At the recent 2014 CUNA Community Credit Union and Growth Conference, credit union leaders and I dug into the question “Why Are Consumers Unbanked” to uncover strategies that may help the movement better serve these individuals.
Below are just five of the “why’s” we discussed:
Misperceptions about money persist
Underserved consumers report feeling they do not have enough money for a bank account.
Geography plays a role
Consumers in five states in particular are more likely to be unbanked and underbanked – Mississippi, District of Columbia, Georgia, Kentucky and Texas.
Culture can be a driver
Nearly one out of two Hispanics are unbanked or underbanked.
Past behavior predicts future
Households that have previously had a bank account are less likely to report they do not need an account or to use alternative financial services.
Language barriers are real
Nearly 20 percent of Spanish-speaking, unbanked, foreign-born non-citizens cite “account opening requirements” as the main reason they do not have an account.
For credit unions, we discussed, there exists a great opportunity to provide a better alternative for these individuals. That’s because everyone has financial service needs – almost daily. Take a look at the five “why’s” above and ask yourself if your cooperative can address any or all of these for your local unbanked and underbanked community.