By Farris Willingham
Banking has never been easier, but that is not enough to convince thousands of Oklahomans to park their cash in even a simple checking account.
Oklahoma has one of the highest percentages of unbanked and underbanked households in the nation, at 34 percent, according to a 2011 survey by the Federal Deposit Insurance Corp. About 11 percent are unbanked.
Unbanked refers to having no checking or savings account. The underbanked have a checking or savings account but, like many of the unbanked, use “alternative financial services” such as non-bank money orders or payday loans.
Experts count these groups to measure how many people are alienated from the mainstream financial system, which is the gateway to building savings and often the cheapest, most secure way to make transactions. People with little or no relationship to banking are less likely to save or own assets such as a house or car. They also are more likely to spend too much on fees for services such as check cashing, experts say.
Lack of banking is most prevalent among low-income and minority groups. In Oklahoma, more than one-third of African-American households, and nearly four in 10 Hispanic ones, are unbanked, according to the FDIC survey.
People shun banking for various reasons. They may believe they don’t have enough money to get a checking or savings account. They may feel they don’t need or want an account.
Some are afraid to open an account because they had bad experiences with banking fees. Others may lack the identification requirements to open one.
The unbanked and underbanked often seek out faster, more expensive services, such as pawn shops, tax-refund-based loans and prepaid debit cards.
People use unconventional services because they meet certain needs, said Tammy Edwards, vice president of community development at the Federal Reserve Bank of Kansas City. Consumers like having a one-stop place, quick cash and convenient locations and hours of operation, she said.
Edwards said many families avoid banks because they get wrong information from friends and relatives.
“If that information was incorrect or incomplete, that was what they used to make their decisions,” she said, stressing that financial education is important for all consumers. “The more information you have about financial matters, the better financial decisions you’ll make.”
Regardless of an individual’s income or background, she said, “it’s important to have a relationship with a bank, even if it is for a savings account.” Being banked with a regulated financial institution allows individuals to save, have access to fair credit and to invest, such as making payments on a house to build equity. Banks also guarantee the safety of deposits.
“Given what has happened to Oklahoma (with tornadoes wiping out homes and possessions) in the last few weeks, I would hope that those who don’t have a relationship with a financial institution, they would see the importance of one,” Edwards said.
The number of unbanked households in Oklahoma increased from 2009 to 2011, according to the surveys. However, Oklahoma City and Tulsa saw a drop, Edwards said, meaning outreach efforts need to focus on rural areas.
Bank On, an organization with more than 70 programs nationwide, is one solution, Edwards said. The group attempts to create partnerships among financial institutions, community-based groups and local and state governments to help those underserved by banks. Programs are offered at the city, county or state level, providing resources such as free or low-cost accounts and financial education.
Edwards said Colorado established Bank On Denver in 2009, when about 9 percent of Denver’s residents were unbanked. The group targeted minority populations, offering products and education tailored to the underserved demographic. In 2011, that number dropped to 5.2 percent.
“We think that the key reason was the launch of the Bank On campaign,” Edwards said. “I have no reason to believe it couldn’t be replicated in Oklahoma.”
Oklahoma Watch is a nonprofit organization that produces in-depth and investigative journalism on important public-policy issues facing the state.
By Farris Willingham
- State, national, world
More snow in the forecast for Oklahoma
Keep that shovel handy: Oklahoma is bracing for more snow after a weekend of snow, sleet and ice.
Insurance agents feeling left out of Obamacare
Brokers' frustrations with the website are amplified by the pressure they face to add customers to offset reductions in their commissions under the law.
South Africans of all faiths pray for Mandela
The extended farewell — a bittersweet mix of grief and celebration — ends Dec. 15, when Mandela is to be buried in his rural hometown of Qunu in Eastern Cape province.
Billy Joel, 4 others receive Kennedy Center Honors
Billy Joel joins Carlos Santana, Herbie Hancock, opera star Martina Arroyo and actress Shirley MacLaine in receiving the Kennedy Center Honors.
No hugs allowed? Madison targets pro cuddlers
For $60, customers at the Snuggle House can spend an hour hugging, cuddling and spooning with professional snugglers, but city officials are keeping their hands to themselves.
Duncan resident, 93, celebrates holidays with twin
Charlie Ray "Bill" Hanson and Faye "Tater" Hanson Anderson were born Jan. 19, 1920, in Countyline and grew up in the Loco area. Hanson now resides in Duncan, while Anderson is in California.
90-year-old Oklahoman serves state for decades
Snow, ice, deep-freeze hit large swath of U.S.
Icy conditions were expected to last through the weekend from Texas to Ohio to Tennessee.
Macklemore, Lamar muscle into Grammy picture
Macklemore and Lewis dominated a nominations TV special from the Nokia Theatre in Los Angeles that also included performances by nominees Taylor Swift, Katy Perry, Lorde and Robin Thicke.
Police: Pa. newlyweds killed man from Craigslist
Elytte Barbour told investigators "that they committed the murder because they just wanted to murder someone together," police said in the affidavit.
- More State, national, world Headlines
- More snow in the forecast for Oklahoma