NEW YORK & LONDON, Oct. 17, 2016 (GLOBE NEWSWIRE) — According to the latest reporting by Wall & Broadcast, millennials aren’t quitting banks, as is often reported and held as popular belief. Instead, banks are pushing the economically distressed, many of whom are millennials, out of the system via excessive and sometimes hidden fees.
Wall & Broadcast conducted in-depth interviews with the Pew Charitable Trusts, as well as FinTech subject matter experts on the problem of America’s unbanked, to better understand this trend. The team also visited a New York City check cashing location to speak with unbanked and de-risked individuals who are patrons of alternative banking services to hear their stories.
In episode 3 of Wall & Broadcast, co-hosts Alex Tabb and Dan Simon, alongside executive producer Anna Stumpf, discuss how retail banks are taking actions to push out financially stressed customers and are thus adding to the expanding numbers of ‘unbanked’ in America. A sampling of the findings discussed:
- A research officer from Pew Charitable Trusts tells how overdraft protection programs often push people on the economic fringes out of the banking system by functioning like high-cost short-term credit for financially vulnerable consumers (w/APR’s verging on 17,000%).
- According to the Consumer Financial Protection Bureau (CFPB), retail banks collected ~$11 billion in overdraft protection fees last year.
- Two thirds of the 37 million adults in the U.S. that do not have bank accounts are millennials or gen-x and are three times more likely to be unemployed than bank consumers. The key characteristic of the unbanked population is that they are primarily low income.
- If you are low income, banks oftentimes characterize you as high-risk, according to Amit Sharma, Co-founder of Empowerment Capital and new FinTech venture Verdigris. Banks have no way to differentiate between poor and creditworthy vs. poor and insolvent.
- The majority of banks use systems like ChexSystems, which looks at your bank activity and is reviewed when you sign up for a bank account. Essentially, individuals can get denied banking services based on this system’s scoring.
- Elevate CEO Ken Rees reveals that since 2008, almost 150 billion dollars of bank credit has been eliminated from non-prime consumers, pushing these consumers into the arms of payday and alternate lenders, which are being increasingly viewed as mainstream providers.
To learn more about the plight of America’s unbanked, you subscribe to Wall & Broadcast through iTunes and Stitcher and stream the show directly at both TabbFORUM and www.wallandbroadcast.com.