Recently the Economist magazine offered a pretty comprehensive summary of efforts that government entities, nonprofits, and banks have made to get people who do not use banks (the unbanked) into the banking system. The push is not only because banks want customers. In fact, many of the new programs for reaching the unbanked require banks to make big concessions.
The bigger concern is that low-income people and immigrants get taken advantage of by payday lenders, check cashers, and the like.
One program that is now in several U.S. cities actually started with the innovative Bank On San Francisco. Bank On San Francisco emerged to meet a need. First, a broad range of stakeholder groups evaluated why low-income people often preferred using payday lenders. Having found that the customers liked the hours, locations, and apparent clarity about costs, the groups developed a system that could meet more needs. (In New Haven the police were involved in a similar effort because too many immigrants carried all their cash on their persons, and that led to too many muggings.)
I’m interested in this issue, and so I was intrigued by a NY Times story on traveling tellers rural India.
“Swati Yashwant, a 29-year-old mother of one, is part of a growing legion of roving tellers intent on providing bank accounts to the nearly 50 percent of India’s 300 million households that do not have them. Using a laptop computer, wireless modem and fingerprint scanner, Ms. Yashwant opens accounts, takes deposits and processes money transfers for farmers and migrant workers in this small town 70 miles south of Mumbai, India’s financial capital.
“To reduce the risk of robbery or theft, no transaction by law may exceed 10,000 rupees (about $212). And in practice, many amount to no more than a dollar or two. But with the bulk of India’s population living in villages that have never had a bank branch, Ms. Yashwant, with her electronic devices, is a missionary of financial modernity.” Read more here.
The Indian idea looks like one that might be gainfully imported to the United States.