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Special Report: Unbanked and Underbanked
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Articles and Reports
Bank on San Francisco
(Program to reach unbanked)
Bank on San Francisco is a joint effort of the Office of the Mayor, the Office of the Treasurer, and the Federal Reserve Bank of San Francisco. The goal is to bring 10,000 of the estimated 50,000 unbanked individuals in San Francisco into the financial mainstream by helping them to open a low-cost, starter bank account. >>more
Banking Unbanked Immigrants Through Remittances
George Samuels
Federal Reserve Bank of Boston
Tanya Fernandes used to go to her local Western Union to take care of many of her financial services needs. She went there to cash checks, buy money orders, and send money home to her family in Cape Verde, Africa. She did not know that she had an option to pay less for these services until a family member told her about a Cape Verdean remittance program available at the Citizens Bank branch in the Upham’s Corner section of Dorchester, Massachusetts. Investigating the program, Ms. Fernandes discovered a slew of other tools to conduct her financial affairs. >>more
Bringing in the Unbanked
Vanessa Sumo
Region Focus (Winter 2007)
Telenovelas, or Spanishlanguagesoap operas, are wildly popular among Hispanics. They typically tell the story of a poor but beautiful girl who falls in love with a rich, handsome young man, and the story unfolds with every design imaginable to keep them apart, usually plotted by the fellow’s scheming family and ex-fiancé. Telenovelas have such a fervent following that when BB&TCorp. decided to produce a set of tapes for its Hispanic banking customers, it made sense to follow this genre. >>more
Making Markets an Asset for Lower Income, Working Families
Matt Fellowes
The Brookings Institution (April 2007)
Testimony before the California Assembly Banking and Finance Committee Hearing on “The Un-banked” (April 9, 2007)
Chairman Lieu, Vice Chairman Gaines, and other members of the committee, thank you for inviting me to talk with you today about this important opportunity to build wealth among California’s lower income working families by expanding access to banking services. Building a relationship with a bank is one of the first crucial steps that families must take to have any meaningful chance to get ahead in today’s economy, and I applaud the committee for striving to expand access to that opportunity. If you are successful, I am confident that you will be rewarded with more upwardly mobile working families, a growing California economy, and a more vibrant, robust banking industry. >>more
New Area Banks Target Different Customer Bases
George Avelos
InsideBayArea.com
Two new local banks are preparing to open operations in the East Bay this year, but each expects to scout for clients in different sectors of the economic landscape. OneCalifornia Bank is getting ready to open in downtown Oakland. On the other side of the East Bay hills, California Bank of Commerce is readying a start of operations in downtown Lafayette. >>more
Stored Value Cards: An Alternative for the Unbanked?
Federal Reserve Bank of New York (July 2004)
Stored value cards are one of the most dynamic and fastest growing products in the financial industry. Anyone who makes purchases with a merchant gift card, places phone calls with a prepaid telephone card, or buys goods or services with a prepaid debit card is using a stored value card. Certain types of these cards are being heavily marketed to lower-income consumers, especially the unbanked or underbanked. Although these cards may provide consumers with a more effective means of accessing funds and making financial transactions than cash, consumers need to be aware that these cards come with a vast array of features, fee structures and levels of consumer protections. >>more
Strategies for Banking the Unbanked: How Banks Are Overcoming Entrance Barriers
Patrick Contreras and Eric Robbins
Federal Reserve Bank of Kansas City (January 2006)
Shifting population characteristics are leading to significant change among consumer market segments. Many of these changes are the result of the increasing number of minority consumers — especially Hispanics. As a fast growing market segment, Hispanics may be a new source of growth for financial institutions. However, like many minority consumers, a large percentage of Hispanics do not use banks. Instead, these “unbanked” consumers typically obtain financial services from alternative sources — so-called money service businesses (MSBs). >>more
Taking the Poor into Account: What Banks Can Do to Better Serve Low-Income Markets
Anne Kim
July 2001
An astonishing number of American families lack a basic financial asset — a bank account. The Federal Reserve estimates that about 13.2 percent of American households don’t own a checking account and that about 9.5 percent of American households hold no bank account at all.
The demographics of the “unbanked” are striking:
The unbanked are disproportionately poor. Four out of five of these families make less than $25,000 a year, and two out of five families have annual incomes of less than $10,000.
The unbanked are mostly minorities. More than half of all unbanked households are nonwhite or Hispanic, and studies estimate that as many as onethird of all nonwhite households are unbanked.
Unbanked households are young. One out of three unbanked families is headed by someone under the age of 35, and more than half are headed by persons under 45.
The unbanked are likely to be less educated than the general population. For example, one survey of federal benefits recipients found that of those recipients without a bank account, 59 percent had less than a high school education.
>>more
The Paper Nil: Paycards Help Achieve 100% Electronic Payroll
Brent Gow, Mark Smith and Michael Meredith
American Payroll Association
Electronic pay means employees never have to wait to cash or deposit their paycheck again. Electing to receive pay electronically is a way for employees to gain control and get easy access to their money — even in times of natural disasters like hurricanes, earthquakes, and windstorms. Technology has even made it possible for those employees who do not have a bank account to receive their pay electronically when they opt for a paycard. Such a product is ideal for employees who do not have, or cannot obtain, a bank account, which represents about 10 million households in the United States, according to APA’s Paycard Portal. Luckily, unbanked employees do not have to open a checking account to receive their pay electronically. They may instead opt for a paycard. >>more
'Unbanked' Caught in a Squeeze
Leslie A. Pappas
The Honolulu Advertiser (May 31, 2007)
The Federal Deposit Insurance Corp. estimates that 28 million people in the United States do not have an account at an insured financial institution and 44.7 million are not fully served by the bank relationships they do have. That means to cash checks, pay bills or borrow money, about 40 million households rely on check-cashing centers, money-wiring operations and payday-loan outlets, where fees and interest rates can be high. >>more