Unbanked

Add Evansville, Indiana to the list of communities adopting services for the unbanked. City leaders, in collaboration with a number of financial institutions, have set up a program called "Bank on Evansville." Similar to the "Bank on San Francisco" program currently up-and-running, this program will attempt to keep unbanked families from paying excessive check-cashing fees, which can total nearly $900 annually for some, according to the city.

Though details have yet to be finalized on the program (set to launch in 2009), many banks and credit unions are already offering accounts that require no minimum balance, as well as second-chance accounts for those who have lost one.

To be eligible for these accounts, the city is offering and requiring those who enroll to take a financial education course. Details of the course have yet to be finalized.

Partners include: Old National Bank, the Federal Reserve Bank of St. Louis, the United Way of Southwestern Indiana, Integra Bank, Fifth Third Bank, the Bank of Evansville, Farmers State Bank, Evansville Commerce Bank, Heritage Federal Credit Union and the Evansville Teachers Federal Credit Union.

These programs provide much-needed financial education to those who need it most while providing many with a first-time opportunity to save and build up their asset base.

Between 10 and 20 million Americans are unbanked, meaning they lack a basic checking or savings account. An estimated 40 million others are underbanked--they have a bank account but may have difficulty retaining it, and are not fully integrated into the financial mainstream.

What deters low and moderate income individuals? Households living paycheck to paycheck often avoid traditional bank accounts for their minimum balance requirements, high overdraft penalties, monthly maintenance fees, and delayed deposit of checks. As a result, public-private efforts to pilot initiatives are addressing this disconnect between mainstream market offerings and low-income banking needs and yielding important insights into consumer demand. However, in an effort to tailor public and public-private initiatives targeted towards under-banked populations, it is important to listen to their preferences to structure valuable programs that they will use. In this regard, policy-makers can look to the private sector's experiences for guidance.