Pub. 9 2019-2020 Issue 2

2 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S www.coloradobankers.org BY DON CHILDEARS, PRESIDENT AND CEO, COLORADO BANKERS ASSOCIATION The Rate of Underbanked and Unbanked Americans Is the Lowest in a Decade T he number of Americans who don’t have a banking relationship is at the lowest point it has been since 2009, new FDIC data shows. Just 6.5% of U.S. households - the lowest level since tracking began - were "unbanked," meaning they had no access to a checking or savings account, in 2017. Following suit, the number of U.S. households that are “underbanked,” was 18.7 percent, 1.2 percentage points lower than estimates made in 2015. Underbanked households are defined as having a checking, savings or money market account, but one that also utilizes other financial services such as payday loans or prepaid cards. The most common reasons why households report they do not have bank accounts are that they feel they do not have enough money to keep in an account, they do not trust financial institutions or that avoiding banks gives them more privacy. Banks are committed to the communities they serve and are creating new ways to expand their offerings in away that is both profitable and practical. And, banks work with federal agencies, community groups and local government to develop successful ways to reach underserved communities. In Colorado, a number of groups are working toward increasing residents’ financial literacy and improving their financial lives with greater access to financial services. The Colorado Bankers Association works with Colorado Jump$tart, Bank on Denver and Bank on Boulder County, programs that help facilitate financial literacy education programs and access to financial services for disenfranchised residents. Banks, meanwhile, continue to expand their efforts to serve customers in all communities, by expanding their footprints, offering extended operating hours, hiring bilingual employees and other innovative products including mobile banking and prepaid cards. Some banks are opening “video branches” in areas where it isn’t feasible to open a full-service branch. The customer talks to a teller through a video monitor and money is exchanged through an ATM-like device. Other banks are offering “gateway” services such as check cashing, bill payment and wire transfer to non-account holders to begin building a relationship with unbanked customers. What’s more, most banks offer free, entry-level or low-balance basic savings accounts. These no-frills accounts have almost always been a better value than check cashing outlets. Still others are offering second-chance checking accounts to consumers with negative information (other than fraud) in databases used for account screening. These accounts offer customers the opportunity to transition to a traditional checking account if, after six months, the accounts are found to be in good standing. While it is very good news that fewer Americans are unbanked or underbanked today, more than 8 million households continue to lack a relationship with any financial institution. It is important that all members of our community are aware of the numerous services the banking community provides. The safest place to keep your money is in a bank. n A WORD FROM CBA