Photo by Hot Furnace, Wikimedia Commons.
Yasmin Gagne writes in Fast Company that the answer to helping the unbanked and underbanked already exists on every Main Street: the post office. As community banks close and Wall Street banks abandon low-income and rural neighborhoods, those residents are forced to rely on often predatory pawn shops, check cashing services, and payday lenders. The average underbanked household now spends almost 10% of its income just to access its own money. Letting the U.S. Postal Service provide basic banking services would meet a critical need of the underbanked.
Gagne highlights the analysis of Mehrsa Baradaran, author of How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy and law professor at the University of California Irvine, who argues that meeting this unmet need is vital to our democracy:
“If banks are supported by the federal government and they’re not serving half the population, that’s not a market problem. I think that’s a problem with democracy. … A lot of the time, people have no way to turn their cash into something digital, or the digital into cash, so they need brick-and-mortar locations to cash their checks. Fintech can’t solve for that. … If they had bank accounts, it would put a huge amount of money back into the economy and back into their lives. This is money they can spend on food and clothes and shelter and all the essentials of life.”