According to the FDIC (Federal Deposit insurance Corporation) report of 2015: 27 PERCENT OF U.S. HOUSEHOLD SERVICES DO NOT HAVE REGULAR ACCESS TO BANKS AND OTHER BASIC FINANCIAL SERVICES. Welcome to the world of non-banking and little banking countries of America, and it's not limited to urban neighborhoods. This is 90.6 million financially limited people who are further punished, in terms of time and money.

Last Tuesday’s night at a Pay-O-Matic in the East village in Manhattan, a long line of male customers, mostly - waited in complete silence. Everyone had to wait until they got to the teller windows. And it's in the July heat! Many had no other choice — not if they pay for their apartments, transfer money to the family home, had to cash checks or carry out other timely financial transactions.

These people rely on alternative financial services (AFS), that charge for transactions. BUT these transactions are free for credit unions, clients of banks and other institutions insured at the Federal level. According to FDIC statistics the number of households with little or no access to bank accounts remains unchanged since 2009. That's despite the financial recovery from the Great Recession and the growth of online financial services.

Based on the FDIC report, about 40,000 American households were surveyed. Why respondents didn't use a bank? Not having enough money to open an account and keep it. Households in this low-income community disintegrate to 7 percent without bank loans and 20 percent non-bank. Frequently these people are young, poor, uneducated, Black and Latino. They rely on lenders working on payday loans, prepaid debit cards, check-cashing shops and other alternative financial products to manage their money.

In this area, the United States is clearly lagging behind other developed countries. The percentage of Americans who have no bank accounts in full is 7 percent. By comparison, Canada has only 1 percent no accounts with financial institutions; Germany has less than 2 percent; and Spain has less than 3 percent (according to the world Bank's 2014 report).

The United States is doing better than developing countries. The same world Bank report showed that only 53 percent of adult Indians had an account with financial institutions, although 24 percent had a mobile account. In Nigeria, 44 percent of adults have accounts with financial institutions and only 2.3 percent have mobile accounts.


As for the US, it is important to look beyond purely economic reasons. This will help to understand why part of the population bypasses the standard financial services. Some people just don't feel welcome. The representative of FDIC pointed out that non-bank households were much more likely to perceive banks as "not interested" in serving households such as their own. Only 17 percent of households without bank accounts reported that they were likely to open an account within the next 12 months.

Alternatively, in non-bank households that perceived banks as interested in” servicing households like their own", 50 percent are “likely to open an account within the next 12 months.” Thus, the perception of banks as exceptional subjects can perpetuate socio-economic deprivation of civil rights.  The way banks present themselves to working poor and other financially struggling communities seems to have consequences. And these consequences go far beyond the intricacies of marketing.

The AARP senior policy adviser, Joe Valenti, described in detail some of these implications. "The lack of bank accounts increases the costs of families," he says, "from hundreds to even thousands of dollars a year in transaction fees.” Americans spend $100 billion annually for check-cashing and pay-as-you-go services, which is essentially a surcharge for being poor. This information was confirmed by the Center for Financial Services Innovation (CFSI), a nonprofit think tank, based in Chicago. Valenti also notes that dependence on AFS increases the risk of savings disappearing as a result of theft or loss. This in turn can lead to missed opportunities to invest, save and spend in a world that is increasingly distant from cash.

Luckily, technological innovation is changing the landscape of AFS in favor of consumers who may have never stepped into a branch of Citibank or Wells Fargo. Teresa Schmal, CFSI Manager, notes that "solutions using digital and mobile platforms can provide enhanced access " for non-banking. It can also exclude the presumption of exclusivity that prevents many non-bank and small-bank households from getting close to the basic financial services, as well as eliminating those seemingly endless lines.