In the film “Raiders of the Lost Ark,” Indiana Jones is among countless seekers of the legendary Ark of the Covenant — the gold-plated chest used to store the tablets bearing the Ten Commandments. What Jones and his peers discover, however, is that sometimes finding what you are looking for is only part of the equation. You need to know what to do and how to handle things once you have found what you are looking for.In the 1981 movie, the Nazis who have been racing Jones to find the Ark meet their end when they are melted after opening the Ark and looking directly at the spirits released from the chest. Meanwhile, Jones, who knows enough to look away, is spared. We recently told you who the nation’s unbanked and underbanked are, but it is just as important for community financial institutions (CFIs) to know what to do with this information and how to better serve this demographic. Locating the Unbanked and UnderbankedDepending on where your CFI is based, locating the unbanked or underbanked households in your footprint can be easy. For instance, if your CFI is in Mississippi, this state led the nation with the highest percentage of unbanked households in 2023, according to data from the Federal Deposit Insurance Corporation (FDIC), with 9.4% of the state being unbanked. Other states topping the list include Louisiana with 8% and Georgia with 7%. Not surprisingly, states with the largest percentage of unbanked homes are found in the South and Midwest. The reality, however, is that unbanked and underbanked populations can be anywhere. As CFIs strive to help serve this demographic, here are a few suggestions of how to find areas that are more likely to contain unbanked and underbanked households:
- Use FDIC data. Databases such as the FDIC’s unbanked rates by geography can be a good starting point, especially if your CFI has a reasonably sized network of branches. The tool breaks down all 50 states into tiny areas, based on demographic factors and the distance from bank branches, making it obvious where there are gaps in physical banking facilities.
- Tap into local resources. To identify unbanked or underbanked households within your immediate community or the surrounding areas, you might consider partnering with local community organizations, nonprofits, and government agencies in the area that may already have good knowledge of individual households lacking basic banking services.
How To Appeal to the Unbanked and Underbanked
- Explain the benefits of banking relationships. Many unbanked and underbanked individuals lack awareness of the advantages of banking, such as budgeting, credit building, deposit insurance, and compounded interest. Financial literacy programs that can break down simple banking concepts into understandable examples can be combined with offerings for credit-building tools and services such as secured credit cards, credit counseling, credit-builder loans, or even small and microfinance loan options. In-person educational events can also help build trust by showcasing bank employees’ expertise and commitment to the community.
- Use mobile branches. Since access to physical branches can be a major barrier in rural areas, CFIs may want to consider mobile bank branches to make in-person banking services available to people within these communities. Mobile branches are vehicles — typically recreational vehicles such as motorhomes, that function as miniature branches and include everything from ATMs to office space. In addition to servicing rural areas, they can be a valuable banking asset following emergencies such as natural disasters.
- Show off mobile banking apps. According to the FDIC’s 2023 National Survey of Unbanked and Underbanked Households, 48.3% of banked homes in the US rely solely on mobile banking offerings. Also, the number of unbanked households with smartphone access has doubled since the 2013 survey, reaching over 71%. Given this reality, CFIs should ensure that mobile offerings are easy to use and provide a simple way for people to handle all their banking needs, from account openings to bill payment and savings options.
- Tailor accounts to match their needs. Another way to service this group is by offering accounts that address some of the biggest concerns unbanked and underbanked households have. For instance, offering checking accounts with low fees and minimal account balance requirements could convince unbanked and underbanked individuals to take a leap into a banking relationship.
Reaching unbanked and underbanked communities allows CFIs to attract new customers while helping individuals build credit and improve their finances, fostering long-term loyalty. Helping people within these demographics can also help enhance a CFI’s image within the community.
