Unbanked
Encyclopedia
The unbanked are citizens of a country who do not have their own bank account
. Along with the underbanked
, they may rely on alternative financial services
for their financial needs, where these are available.
as those without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another. The FDIC estimates there are 10 million unbanked or underbanked
American households. The majority of them are American born while a growing number are immigrants where the two groups have low income as a commonality and lack the minimum balance to open checking and savings accounts. According to Congressman Hinojosa, half of the unbanked had a bank account previously but are choosing to not have an account and opting to using the services of check cashers and payday lenders instead.
In 2003, Donald E. Powell, Chairman of the FDIC, mentioned a personal experience that caused him to believe that banks need to make a greater effort to ensure "all are welcome in the lobbies" which includes getting out into the community because trust is important.
Governor Arnold Schwarzenegger
started the Bank on California
initiative to help the unbanked in 2008. Previously, in 2001, a financial education curriculum called Money Smart was launched by the FDIC to help the financially unsavvy.
Prior to becoming the FDIC chair in 2006, Sheila Bair ran a research project at for the Inter-American Development Bank
at the University of Massachusetts
to discover ways to help unbanked Latin American immigrants use the U.S. Banking System. Like past studies it was found that the primary reason recent Latino immigrants don't use banks to remit money is because they don't have documents of legal alien status. Around the same time the Treasury Department put in place Section 326 regulations that allow banks and credit unions to accept identification from foreign governments at their own discretion. Banks like Mitchell Bank in Milwaukee have taken up the Treasury Department on their relaxing of identification standards. They have even "offered pamphlets on how to apply for a Wisconsin state ID and driver's license, and invited the Mexican consulate in Chicago to visit with a mobile unit that issues "matricula" cards." In Chicago, the Consul General of Mexico, Carlos Sada, estimated that up to 25% of applicants of the Matricula Consular
ID apply in order use it to acquire U.S. bank accounts.
Bank account
A Bank account is a financial account recording the financial transactions between the customer and the bank and the resulting financial position of the customer with the bank .-Account types:...
. Along with the underbanked
Underbanked
The underbanked are people or businesses that have poor access to mainstream financial services such as banks and so rely upon alternative financial services targeted at poor people such as cheque cashers, loan sharks and pawnbrokers They may be distinguished from the unbanked who have no banking...
, they may rely on alternative financial services
Alternative financial services
Alternative financial services are financial services provided outside traditional banking institutions, on which many low-income individuals depend. In developing countries, these services often take the form of microfinance...
for their financial needs, where these are available.
The unbanked in the United States
The unbanked are described by the Federal Deposit Insurance Corporation (FDIC)Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
as those without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another. The FDIC estimates there are 10 million unbanked or underbanked
Underbanked
The underbanked are people or businesses that have poor access to mainstream financial services such as banks and so rely upon alternative financial services targeted at poor people such as cheque cashers, loan sharks and pawnbrokers They may be distinguished from the unbanked who have no banking...
American households. The majority of them are American born while a growing number are immigrants where the two groups have low income as a commonality and lack the minimum balance to open checking and savings accounts. According to Congressman Hinojosa, half of the unbanked had a bank account previously but are choosing to not have an account and opting to using the services of check cashers and payday lenders instead.
In 2003, Donald E. Powell, Chairman of the FDIC, mentioned a personal experience that caused him to believe that banks need to make a greater effort to ensure "all are welcome in the lobbies" which includes getting out into the community because trust is important.
Governor Arnold Schwarzenegger
Arnold Schwarzenegger
Arnold Alois Schwarzenegger is an Austrian-American former professional bodybuilder, actor, businessman, investor, and politician. Schwarzenegger served as the 38th Governor of California from 2003 until 2011....
started the Bank on California
Bank on California
Bank on California is an initiative started by California Governor Arnold Schwarzenegger on December 12, 2008, to help Californians open a bank account. The program seeks to encourage financial institutions to relax identification requirements when opening a bank account to include Mexican CID...
initiative to help the unbanked in 2008. Previously, in 2001, a financial education curriculum called Money Smart was launched by the FDIC to help the financially unsavvy.
Prior to becoming the FDIC chair in 2006, Sheila Bair ran a research project at for the Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
at the University of Massachusetts
University of Massachusetts
This article relates to the statewide university system. For the flagship campus often referred to as "UMass", see University of Massachusetts Amherst...
to discover ways to help unbanked Latin American immigrants use the U.S. Banking System. Like past studies it was found that the primary reason recent Latino immigrants don't use banks to remit money is because they don't have documents of legal alien status. Around the same time the Treasury Department put in place Section 326 regulations that allow banks and credit unions to accept identification from foreign governments at their own discretion. Banks like Mitchell Bank in Milwaukee have taken up the Treasury Department on their relaxing of identification standards. They have even "offered pamphlets on how to apply for a Wisconsin state ID and driver's license, and invited the Mexican consulate in Chicago to visit with a mobile unit that issues "matricula" cards." In Chicago, the Consul General of Mexico, Carlos Sada, estimated that up to 25% of applicants of the Matricula Consular
Matrícula Consular
The Matrícula Consular de Alta Seguridad is an identification card issued by the Government of Mexico through its consulate offices to Mexican nationals residing outside of Mexico. Also known as the Mexican CID card, it has been issued since 1871...
ID apply in order use it to acquire U.S. bank accounts.
External links
- Christopher Choe (2009), Bringing in the Unbanked off the Fringe: The Bank on San Francisco Model and the Need for Public and Private Partnership, Seattle Journal for Social Justice, 8(1)