Business Columns & Blogs

Should financial institutions reach more ‘unbanked’ people?

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CEOs were asked: Eight percent of households in the Miami, Fort Lauderdale and West Palm Beach metropolitan area were unbanked in 2017, borrowing money or cashing checks outside the banking system, according to a FDIC survey in October. Should banks increase their efforts to serve the unbanked population, and if so, how?

We disagree with the Fed numbers. AegisFS Business Intelligence suggests that 19.6 percent are unbanked and underserved. Our focus is to provide these sectors with our debit card program, allowing these unfortunate citizens the opportunity to have access to conventional financial services. So far, we are one of the leaders for this space and are consulting with local banks how to access and on-board these worthy/unfortunate consumers. Many banks have minimum balance requirements. Our programs hit the essence of online mobile access banking. Slowly, these dynamics are changing for the better.

Jim Angleton, CEO for Aegis FinServ Corp.

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Absolutely. The financial disadvantages of being unbanked are comparable to the healthcare-related disadvantages of being uninsured. Payday loans or check-cashing services contribute to financial health, as much as accessing emergency care in place of primary care promotes overall health. Similarly, the solution to the problem requires a community approach, and information technology will have an important role to play in improving access.

Wael Barsoum, M.D., CEO and president of Cleveland Clinic Florida

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All Florida residents benefit when our citizens utilize the banking system. When consumers can be "banked," they can ascertain loans and credit cards at more attractive rates, and have access to savings accounts and other interest-bearing financial instruments. This access allows them to spend more in our local retail stores, restaurants, and car dealerships. A reduction in crime is notable when less cash is housed at home instead of a protected bank account. Education and accessibility are mission critical to reducing the 8 percent of South Floridians who are currently unbanked. The unbanked need to feel that they qualify and will benefit from the banking system instead of being intimated by it.

Brett Beveridge, CEO and founder of The Revenue Optimization

Companies (T-ROC)

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Of course they should increase their efforts. The economy always functions better with more money being circulated through systems that we can control. The easiest way to do so is to build non-traditional banking centers in the underserved areas. Banking centers can be placed inside of small bodegas and restaurants. They can pay for subleasing spaces in churches, barber shops and brick and mortar nonprofit heath care and service centers. Many larger banking companies have to spend CRA dollars. They can reallocate some of those monies to subsidize the creation of these centers.

Bill Diggs, president, The Mourning Family Foundation

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Access to banking services is important. Technology can make this easier, too. All members of our community deserve to have a trusted bank that is committed to their financial well-being. The introduction of new technologies has the potential to help the unbanked overcome the main hurdles — including cost, geography, regulatory issues, lack of trust — and help them become participants in the formal economy.

Jorge Gonzalez, president and CEO, City National Bank

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Fundamental to this discussion is educating all Floridians on the benefits of the banking system, and the risks and benefits relating to access to capital. This education should start early, and continue for a lifetime. Perhaps banks can expand investment in such education, particularly in communities with high unbanked populations. At Broward College, we provide mentoring to our students in finance, banking and accounting. For example, we have co-curricular clubs such as the finance club and DECA that provide students with information and recommendations on how best to utilize the banking system. Additionally, the Broward College Business Pathway has courses relating to banking that provide knowledge and case studies on how students can use bank services to their advantage.

Gregory Adam Haile, president of Broward College

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Community banks and credit unions have made this an area of focus, and new digital and physical retail entrants, which aren’t regulated, have attempted to fill the void. It would be better for regulators and community-based financial institutions to work with new technology vendors, such as Payveris, to help bridge the divide and include this population in the mainstream economic engine at a lower cost.

Louis Hernandez Jr., CEO of Black Dragon Capital

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The cash economy has been a substantial part of the Miami business landscape for generations. I don’t see a slowdown in that sector. While traditional services like free checking accounts and extended banking hours likely won’t convert that population into banking customers, commercial banks should and will continue to develop products and services. One example is the acceptance of payroll cards — employers can now transfer workers’ pay directly into debit cards without the need for the employee to have a separate checking account.

Agostinho Alfonso Macedo, president and CEO of Ocean Bank

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I do not believe that banks should be compelled by law or rule to increase their efforts to serve the unbanked population. I think that the fact that 8 percent of households in South Florida are unbanked is part of a larger issue of inadequate financial literacy in South Florida and throughout the United States. Commercial banks could contribute to ameliorating this situation by their participation and allocation of human and financial resources as part of their charitable giving and endeavors to one or more of the charitable organizations focused on improving financial literacy.

Paul Singerman, co-chair of Berger Singerman

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In order to properly answer this question, we need a lot more information regarding the purported 8 percent of unbanked local residents. For example, what are their demographics? Are they retired? What type of transportation do they have (i.e.: cars or use public transportation)? Are there any banks close to where these people live or work? Do they have enough cash to open an account without being charged fees, etc.? Additionally, is banking these 8 percent of unbanked people even profitable? The banking business as a whole has changed because of technology. Successful banking is no longer based upon friendships or relationships, it is all about speed to market, easy access to cash, deposits and banking. In short, fewer fees and more speed. Banking is no different than other businesses. In order to compete, the banks must find different ways to attract business and communicate with their perspective clients. I find that most banks are aggressive with their rates and their service, hence, if there is an 8 percent group of unbanked people, then perhaps they are unbanked for a reason.

James “Jimmy” Tate, co-owner and president of

TKA-Evolution Apparel and of Tate Capital,

and co-founder of Tate Development Corp.

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Many of the working poor have always struggled with ownership within the banking system. If the American institution of banking is to survive and thrive, it must address the needs of all, including the unbanked population. As such, banks should increase their hours to better accommodate the needs of those working later hours, decrease the exorbitant number and amount of fees (such as $35 for a returned check), and increase the interest paid for using their customers’ funds.

Dorcas L. Wilcox, CEO of Miami Bridge Youth

& Family Services

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Yes, banks should increase their efforts to serve the unbanked population. There is great opportunity to reach this market, particularly by leveraging public-private partnerships that prioritize financial education and inclusion. These partnerships would bring together financial literacy education and mobile/digital access to banking systems. The traditional banking system has the opportunity to welcome this population while providing the financial literacy skills critical to safeguarding vulnerable populations from exploitation and abuse.

Chelsea Wilkerson, CEO of Girl Scouts Tropical Florida

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