The numbers have been circulating for months now: 17 million people nation-wide are “unbanked”—the common buzzword used to describe those who use alternative services to fulfill financial needs. But why do low-income people avoid traditional banks? The answer comes down to money.
Lisa Servon, professor at The Milano School of International Affairs, Management, and Urban Policy, spent four months working as a check casher at a RiteCheck cash checking facility in the Bronx, and her insights complicate the increasingly difficult movement to increase financial inclusion in America.
Typically, scholars and advocates for incorporating the large unbanked population into the formal financial sector decry exorbitant rates from payday loans, as well as the fees from everyday activities such as cashing a check and sending money. But a lack of transparency at banks hides charges greater than those from the alternative services. In a recently published op-ed in The New Yorker, Servon discusses why banks don’t do a good job of serving the poor.