It never occurred to me, or to anyone I knew growing up in a middle-class suburb southwest of Cleveland, not to have a bank account.
Bank accounts were a non-negotiable part of life for us and our parents, many of them first-generation Americans. Most banks had a regal marble-filled palace of a main office downtown with a few branches in the outlands. Deposits used to be hand-written in dog-eared passbooks when a wad of cash or stacks of change were pushed across a gleaming wood counter to a no-nonsense teller. Opening hours and days were limited; that's where the term "bankers' hours" comes from.
A special feature, especially for kids, was a short-term Christmas Club savings account designed to collect a designated amount of cash each week for holiday spending. Gathering the accrued savings in November or early December was a cause for celebration around our house. It made us kids feel like grownups.
In the 1960s, banks decided to become less stuffy and more user-friendly by tempting customers to open accounts with free clocks, dinnerware, toasters, coffeemakers, kitchen knives, cameras, and other promotional items. ATMs, often called autotellers or cash dispensers then, started showing up in the late 1960s, capable of mechanically producing a fixed amount of cash with the use of a coded card. They jammed a lot.
Banking is a natural for many of us. But not everybody. That's a problem, as evidenced by the financial challenges faced by so many during the recent 35-day government shutdown. CNBC reported that over half of the affected 800,000 federal workers used up all or most of their savings while furloughed or not being paid; that means they likely had emergency savings to last for a month.
Americans aren't saving enough--not for calamities, not to buy a house, not for college, not for retirement, not for the future. According to an FDIC national survey, 7.5 percent of Arkansas households were considered unbanked in 2017--no checking accounts, no savings accounts--while 19 percent were underbanked.
Why? Banks often don't offer a full range of products for customers with limited resources, or don't have branches in areas where such customers live. Some aren't open at convenient times, or charge fees for transactions, or can't clear a customer's check right away (like a check-cashing service can do). And without a system of experienced bank users surrounding them, plenty of people don't have financial literacy, and they don't trust banks.
So they turn to high-cost alternative financial services that charge exorbitant fees for everything from short-term consumer loans to cashing checks to title loans on cars. A Pew report from 2015 found that almost 1 in 4 unbanked people used prepaid reloadable debit cards that are not affiliated with a bank and often charge monthly fees plus fees for each transaction.
"If we're going to support savings, we must stand up to those who actively seek to extract wealth from our communities," says Darrin Williams, chief executive officer of Southern Bancorp Inc., a community development financial institution dedicated to delivering affordable lending to help low-income, low-wealth, and other disadvantaged people and communities.
That's where BankOn Arkansas+ comes in. It's an initiative to ensure that Arkansans have access to safe, trusted, and affordable banking so they can save for themselves, build wealth for their families, and improve quality of life in their communities.
Here's the story, shared by Nathan Pittman, senior vice president of policy and communications at Southern Bancorp Inc.
"Going back to 2017, Darrin Williams and Karama Neal [Southern Bancorp Community Partners' chief operating officer at the time; she was named president of SBCP in 2018] were talking about the Arkansas Times' annual Big Idea series. As a Community Development Financial Institution, the notion of reaching more unbanked and underbanked people is always top of mind at Southern Bancorp, and we were aware of the national Bank On movement."
The discussion moved to the need to get other banks in Arkansas on board with the idea, says Pittman, "so Darrin thought, why not write something up on establishing a BankOn coalition here as a big idea? We knocked out a short writeup on it and the next thing we know, Darrin is on the cover of that year's Big Ideas issue."
The Arkansas Asset Funders Network, a chapter of a national grantmakers network that invests in the economic improvement of low- and middle-income individuals and families, got involved shortly after that with seed money, he said, "and the whole thing snowballed. The BankOn Arkansas+ Coalition officially launched last November with several banks participating by offering a BankOn certified account, with others working toward it."
Membership of the network--which seeks to ensure that Arkansans have access to safe, trusted, and affordable banking so they can save for themselves, build wealth for their families, and improve quality of life in their communities--is open to funders who invest in asset-building efforts such as early childhood education, college access, workforce development, and health initiatives. Along with Southern Bancorp, they include the Winthrop Rockefeller Foudation, Entergy Charitable Foundation, Carl B. and Florence E. King Foundation, and the Federal Reserve Bank of St. Louis-Little Rock Branch.
BankOn Arkansas+ is a confident step forward. Yet, according to Williams in a recent guest column in Perspective, "we're barely scratching the surface of what it takes to truly move the needle around financial security and stability. It's going to take a concerted effort and partnership between financial institutions, community advocates, private industry, and policymakers."
Opening a bank account comes next.
Karen Martin is senior editor of Perspective.
kmartin@arkansasonline.com
Editorial on 03/24/2019