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Better Banking

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Better Banking

PopTech,

5 min read
5 take-aways
Audio & text

What's inside?

If check cashing companies prey on the poor, why do low-income clients prefer them to banks?

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Editorial Rating

9

Qualities

  • Innovative

Recommendation

Brava, Lisa Servon! In her superb presentation, the professor of urban policy explores the shortcomings of banking services for poor communities in the United States. Unlike most academics and policy makers, who have a tendency to postulate from afar about the needs to the poor, Servon climbed down from her ivory tower and got her hands dirty working at a check casher in a poverty-stricken neighborhood. Her gallant efforts were not in vain: Servon deftly found the root of the problem. getAbstract recommends Servon’s persuasive conclusions to policy makers, banking executives and oblivious middle-class Americans who assume that the poor need their systems.

Summary

Over the past several decades, in order to cut operational costs, banks have shifted transactions “from the teller window, to the ATM and now…to online banking.” Such developments have ostracized a large segment of the population. In the United States, 10 million Americans were unbanked in 2002; by 2012, this figure had grown to 17 million, mainly concentrated in low-income communities. Unbanked people often favor alternative financial services – such as “the check cashers, the payday lenders, the pawn shops” – over banks. According to popular opinion, these services charge exorbitant fees and prey...

About the Speaker

Lisa Servon is professor of urban policy at The New School in New York City. She wrote Bootstrap Capital.

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