2020 Conference

Financial exclusion, Banks, Financial Products, Financial Exclusion, Affordable Accounts

This study explores banks' perspectives on their current efforts to serve financially excluded customers by providing services and basic and affordable checking account products. Also studied is their perspective on policy solutions to the challenges of the financially excluded. In semi-structured interviews in one mid-western city with a high percentage of un- and underbanked, 22 staff members from 15 banks describe their current efforts to serve low- and moderate-income (LMI) consumers through products and services, and the challenges and limits of their efforts. Six themes were found in the data: 1) Banks are aware of the problem of financial exclusion; 2) While financial education is important, it poses challenges to deliver, and has a lack of demonstrated outcomes; 3) Small monetary or regulatory rewards are evident for offering basic checking accounts; 4) Little advocacy pressure is evident for affordable accounts; 5) Regulatory and other pressures fail to facilitate solutions for financial exclusion; and 6) Solutions to financial exclusion are a mix of policy, organizational capacity, and methods to influence behavior. Discussion focuses on challenges to delivering affordable products and services, and policy reforms beyond further pressure or incentives to banks to offer affordable accounts that might support greater financial inclusion.