Tackling Unbanked / Underbanked Challenges Requires A Multifaceted Approach, New Report Says | national news
NEW YORK, May 18, 2021 / PRNewswire / – A New Report, Provide financial products and services to the unbanked and underbanked by United States – Challenges and opportunities, from six business groups, describes the barriers and viable solutions to improve financial inclusion, providing access to bank accounts to the unbanked population in United States, which currently accounts for about 6% of US households, and to reduce the use of high-cost non-bank financial products and services.
The paper identifies the main reasons why individuals are unbanked / underbanked and highlights the existing actions of banks, credit unions, nonprofits and policy makers that have shown promise in meeting the challenge. more complete integration of individuals into the banking system. The document also makes recommendations that policymakers should consider moving forward. The paper is written by The Clearing House, the American Bankers Association, the Consumer Bankers Association, the Credit Union National Association, the Mid-Sized Bank Coalition of America, and the National Bankers Association.
âFinancial inclusion and access to bank accounts and services is a key priority for banks and credit unions and an important common goal of the private, nonprofit and government sectors,â said Rob hunter, Deputy General Counsel of The Clearing House. “While much remains to be done, we are pleased that the percentage of unbanked US households has declined steadily over the past decade. The recommendations set out in the document are intended to expand that progress.”
The report concludes that instead of putting in place a large, duplicative and potentially expensive banking infrastructure to create bank accounts through the Federal Reserve or the US Postal Service, there are more efficient and less expensive ways to meet the challenge of the unbanked / underbanked, including:
- Verifiable identification: Verifiable ID is not available for many unbanked / underbanked people. Policymakers should focus on this obstacle, along with other factors that the private sector cannot address that contribute to the challenge of unbanking and sub-banking.
- Encourage new bank accounts: When registering beneficiaries for direct payment government benefit programs, individuals should be encouraged to open basic, low-cost bank accounts.
- Public-private partnerships: Public policies should encourage public / private partnerships to continue to innovate and respond to the changing needs of households and individuals, including continuing to advance targeted financial education and messaging on the ways in which a bank account can meet the current needs of an individual.
- Continue successful programs: The banking sector should continue its efforts to reduce the percentage of unbanked households by adopting proven approaches, such as the Bank On initiative which promotes low cost basic accounts.
- Expand broadband access: Expanding high-speed internet access in underserved areas allows individuals to better take advantage of digital banking services, which are the most convenient way to interact with unbanked / underbanked households.
- Ongoing review of unbanked trends: Policymakers should examine the factors that contributed to the sharp decline in the unbanked rate for black and Hispanic households from 2015 to 2019 and the underlying reasons for the persistence of the observed racial disparity and the successful practices of deposit-taking institutions. minority and community development financial institutions to reach financially underserved communities.
“This report details not only how many households are unbanked, but why,” said Naomi Camper, ABA Policy Director. âThis shows why ABA continues to urge all banks across the country to offer Bank On certified accounts, which help attract more people to the banking system. With a certified Bank On account, consumers can be confident that banks want their business. and can provide them with a low cost insured account that offers all the economic opportunities associated with banking. ”
“This research underscores how important it is to remove barriers to financial access for the unbanked and underserved,” said Ryan Donovan, director of advocacy for the Credit Union National Association. âFor more than 100 years, American credit unions have promoted savings and provided access to credit for provident purposes. We look forward to working with policymakers to apply these findings and explore meaningful solutions that improve financial well-being for all.
“The nation’s leading banks are uniquely positioned and committed to helping ensure all Americans have access to safe and sound financial products,” Richard hunt, President and CEO of the Consumer Bankers Association. “This report describes important policies and products that have been successful in putting the unbanked in the bank and reaffirms the important role that financial institutions can play in achieving this goal.” The ABC and our member banks will continue to advocate for equitable services and solutions that provide more communities with the financial tools they need to thrive. “
The full document can be viewed here.
About the Clearing House Association
The Clearing House Association is a non-partisan advocacy organization that represents the interests of its member banks by developing and promoting policies to support a safe, strong and competitive banking system that serves customers, communities and economic growth. Learn more at www.theclearinghouse.org.
About the American Bankers Association
The American Bankers Association is the voice of the nation $ 21.2 trillion the banking sector, which is made up of small, regional and large banks which together employ more than 2 million people, $ 17 trillion in the deposits, and extend closely $ 11 trillion in loans. Learn more at aba.com.
About the Consumer Bankers Association
The Consumer Bankers Association represents the major US retail banks. We promote policies aimed at creating a stronger industry and economy. Founded in 1919, CBA member institutions account for 1.7 million jobs in America, spanning roughly $ 4 trillion in consumer credit and provide $ 275 billion in small business loans each year.
About the National Association of Credit Unions
The Credit Union National Association, Inc. (CUNA) is the largest trade association in United States serving America’s credit unions and the only national association representing the entire credit union movement. CUNA represents nearly 5,300 federal and state credit unions, which collectively serve more than 120 million members across the country. Part of CUNA’s mission is to advocate for responsible regulation of credit unions to ensure market stability, while removing unnecessary regulatory burden that interferes with the efficient and effective administration of financial services to consumers. members of credit unions.
About the Coalition of Mid-Size Banks of America
The Mid-Size Bank Coalition of America (MBCA) is a distinct and singularly focused “self-help” alliance representing the country’s mid-size banks which has the direct participation of each of the CEOs of its member banks and most of their member management committee. Our members include over 95% of all banks with assets between approximately $ 10 and $ 100 billion. Coalition banks are one of the primary sources of loans and investments on the main streets of the United States, serving millions of consumers, households and businesses in communities across the country.
About the National Bankers Association
Since its founding in 1927, the National Bankers Association has served as a spokesperson for black banks and other minority-owned banks. Now, with members that include Hispanic-American, Asian-American, Native American, and women-owned banks, our reach extends across the country. We firmly believe in defending not only our member banks, but also the communities they serve. Our members help low and middle income communities and they are committed to providing economic revitalization to families in these neighborhoods. Many of our member institutions have become banks of last resort for consumers and businesses underserved by traditional banks and financial service providers.
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SOURCE The clearing house