#38: Bank On: Bringing the Unbanked and Underbanked into the Financial Mainstream

Cities for Financial Empowerment (CFE) Fund: https://cfefund.org/The CFE Fund is a 501(c)3 nonprofit organization; our programmatic, research and policy efforts focus on designing, embedding and replicating financial empowerment initiatives within the fabric of local government.The CFE Fund’s national Bank On platform supports local coalition and financial institution efforts to connect consumers to safe, affordable bank accounts: https://joinbankon.org/Bankers, learn more about the Bank On certification here: www.joinbankon.org/certify Research from the Federal Deposit Insurance Corporation shows that there are many reasons consumers lack a basic transaction account: not enough money for the minimum balance; distrust of financial institutions; high or unpredictable fees; or identification, credit or banking history problems. Many Americans are driven to use expensive alternative financial services, including check cashers, payday lenders and pawn shops that charge high fees for financial services that fail to help people get ahead. Without a checking account, families wind up paying too much for basic financial transactions and are hard pressed to build savings and assets.Quick Facts:• Close to 5% of U.S. households (approximately 12 million adults) are “unbanked,” without a checking or savings account.• Almost 11% of U.S. households (approximately 24 million adults) are underbanked, meaning they still use some fringe financial services.• Nearly 34% of unbanked and 45% of underbanked households earn less than $30,000 per year.• Nationally, 48% of Black households and 42% of Hispanic households are unbanked or underbanked, compared to less than 14% of white households.Why do basic transaction accounts matter?A basic transaction account is an important first step in establishing a mainstream banking relationship, depositing earnings securely, accessing credit and saving for the future. Unbanked and underbanked individuals lose the cost savings and stabilizing benefits such an account provides, such as:• Cost savings: The average unbanked person spends 5% of net income on unnecessary fees for alternative financial services. This can amount to $40,000 over a lifetime—a significant amount for those who can least afford it.• Asset building: Without a bank account, a family lacks the ability to save reliably or automatically, or establish a banking relationship that can lead to accessing affordable credit for opportunities like a car, small business, or home mortgage.• Public safety: Without a safe place to deposit their money, unbanked people are more likely to be victims of crime because they often carry large sums of cash with them or keep cash in their homes. Elderly, disabled or undocumented immigrants can be particularly vulnerable.• Financial stability: Research shows that being unbanked makes it harder to achieve financial goals like reducing debt and improving credit scores.David Rothstein, Senior Principal, CFE Fund: https://www.linkedin.com/in/david-rothstein-72a5516/David is a Senior Principal at the CFE Fund (https://www.linkedin.com/company/cities-for-financial-empowerment-fund/), where he leads the national Bank On initiative. Previously, he served as Director of Resource Development and Public Affairs for Neighborhood Housing Services of Greater Cleveland providing fund development and policy leadership. He also served as a research fellow for the New America Foundation in asset building and the Program Director for the Ohio CASH Coalition with Policy Matters Ohio. He has a BA in Political Science from John Carroll University and an MPA from Kent State University.Matt Hanke, Retail Strategies Manager, VP from Northwest Bank: https://www.linkedin.com/in/matthanke/Matt’s years of banking experience from being a Customer Service Representative, Personal Banker, Mortgage Banker and now a member of Northwest Bank’s executive team, has given him an unique perspective on fostering customer experiences that build relationships that exceed expectations.Northwest Bank (https://www.nw.bank/) is a $2.3 billion community bank that offers a full line of business, agricultural, mortgage, consumer deposit and lending products as well as wealth management and insurance services. Northwest Bank has 18 offices located throughout Iowa and Nebraska.Compass Digital Account (https://www.nw.bank/personal/checking/compass-digital-account) is Northwest Bank’s Bank On Certified Product.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~For more information on the CRA Hub, a membership for bankers to connect, inspire, and master the art of CRA: https://cratoday.com/hub/ Copyright © 2021 by CRA Today LLC(No claim to original U.S. government material)All rights reserved. No part of this podcast may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.This podcast is a periodic publication of CRA Today LLC and is intended to notify and inspire recipients of new developments in the Community Reinvestment Act. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. 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