Recently, the FDIC released its2011 National Survey of Unbanked and Underbanked Households. It indicates that 28% of U.S. households are either unbanked or underbanked, an increase from the last survey, conducted two years prior. More than half of all unbanked households said they do not have an account because they believe they do not have enough money or they just don’t need one.
What the study did not address is the attitude or emotion those people hold about not having an account or a relationship with an institution. Is there more or less anxiety associated with being ‘un/underbanked’? My fear is that there is less anxiety – that with a quarter of the households in the un/underbanked status, there is comfort in numbers and no incentive to change the situation.
Last year, during one of our research studies, a woman named Carla proudly stated that she refused to pay bank fees and frankly, didn’t need a bank account. When pressed on how she cashed her paycheck, she confidently told the interviewer that she used a payday loan vendor. As you can imagine, we pushed back on her logic leading with “why are you willing to pay them and not a bank?” Her answer was “because they are transparent, above board and respectful in the exchange. They don’t try to confuse me, act superior or play games with me.”
We asked Carla what it would take for her to reconsider – to think differently about a bank. She stated that a bank would have to change its practices, show up differently and deliver something of value, like helpful information or guidance on how to do something better – make better use of my money or think differently about saving or spending.
In our current research, we discovered that sharing knowhow (the practical knowledge of how to get something done) is one way banks and credit unions can add value for consumers. Knowhow can help to position the financial institution as smart, helpful and a partner that consumers can’t live without.
It seems to me that these unbanked or underbanked consumers have no good reason to change either their attitude or their unbanked status. We have a window of opportunity to educate the “Carlas of the world” on how to access affordable credit, conduct basic financial transactions, and save for emergency and long-term needs. But to do so, we need new tactics, new approaches. Frankly, we need to show up differently than we have in the past and our work is suggesting that feeding relevant, helpful bits of ‘knowhow’ might be one avenue to try.
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