Programs offer stability for unbanked Nevadans

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Ben Margot / AP

In this July 14, 2014, file photo, a man passes by a Wells Fargo bank office in Oakland, Calif.

Mon, Jun 14, 2021 (2 a.m.)

Peter Guzman knows it can be easier to swindle those in the unbanked population within the Latino community in Las Vegas.

People who don’t have a bank account often pay for services in cash, said Guzman, president and CEO of Latin Chamber of Commerce Nevada, which is based in Las Vegas.

“People can be ripped off,” Guzman said. “It’s really to their detriment. When people hire lawyers or work with Realtors, a lot of times they’ll pay in cash, and there are often problems with that.”

There can be any number of reasons of why a person is without a checking or savings account, though often those reasons center on a lack of trust in financial institutions and systems, or the belief that past financial mistakes would likely freeze them out of the banking system.

In Nevada in 2019, the last year for which statistics were available, an estimated 6.3% of households were considered unbanked, according to the Federal Deposit Insurance Corporation.

From 2009—the first year that the FDIC starting tracking unbanked figures—through 2013, just over 7% of households in the state were considered unbanked.

Nationwide, about 7 million people are considered unbanked, according to the FDIC. As many as half are members of non-white minority communities.

While the rate has generally been going down in Nevada in recent years, it did spike to just under 9% in 2015, and it’s a number that many in the banking industry would like to see go much lower.

It remains to be seen how those numbers will be affected by the 2020 pandemic, which caused wide upheaval in the way that people live their daily lives.

Phyllis Gurgevich, president and CEO of the Nevada Bankers Association, said Nevada’s “underbanked” percentage—households where bank accounts could be present, but people use financial products outside the traditional banking system, perhaps a check-cashing service, for transactions—could be as high as 25%.

That would be several percentage points higher than the national average, Gurgevich said, and might be because the state has so many casinos that cash paychecks.

“Using transactional services outside the banking system can be inconvenient and far more expensive for people,” Gurgevich said. “One of the first steps to financial stability is becoming banked and using it for transactions.”

Along with possible distrust and past financial dust-ups, Gurgevich said some shy away from attempting to get a bank account because they think they aren’t wealthy enough for one.

Often, she said, a person’s financial past won’t deter them from being allowed to open a bank account.

“There are accounts out there where the minimum balance to open an account is $25,” Gurgevich said. “There are accounts now where overdraft is structurally not possible. The banks have worked hard to create what they consider safe and affordable accounts.”

According to a report this year from the American Bankers Association, the unbanked population “disproportionately includes low-income and minority individuals.”

Despite some gains in recent years, the report indicated that Hispanic and African American households “remain unbanked at much higher rates than either Asian or white Americans.”

A nationwide network of banks and financial institutions—including Wells Fargo, U.S. Bancorp and Visa—in 2015 came together to form an initiative called Bank On, which aims to make bank accounts as accessible as possible and provide education about banking resources.

Bank accounts certified for the Bank On program must offer “low or no monthly or operating balance requirements, low or no monthly fees, no possibility for overdrafts, and free access to branch and telephone banking,” according to the initiative.

Beginning in 2019, bank branches in Nevada began to offer these types of certified Bank On accounts, including those controlled by Bank of America, U.S. Bank, Wells Fargo and JPMorgan Chase. Over 300 branches in the state now offer Bank On-certified products.

The certified accounts are approved by an organization called Cities for Financial Empowerment Fund, which is funded in part by the Annie E. Casey Foundation.

A Wells Fargo spokesman said the company last month announced its own initiative in an effort to help unbanked and underbanked households step into the banking system.

Along with Black and Hispanic communities, Wells Fargo also identified Native American communities among those it would like to see have more participation in the banking system.

In a statement, Wells Fargo CEO Charlie Scharf said the broadly defined initiative is designed to “work with a broad and diverse group of stakeholders on a sustained multiyear effort to accelerate financial inclusion in the U.S.”

Part of the effort will revolve around the bank offering no-fee ATM transactions for those who hold accounts with “Black-owned minority depository institutions.”

Wells Fargo will also work, according to an announcement about the program, to help unbanked individuals learn more about mobile banking options, which have become very popular in recent years.

In the Latino community, the barriers to the banking system can be different than in some other minority communities, Guzman said.

Older members of the community who came to the U.S. from countries where banking institutions can sometimes be untrustworthy might think a bank is out to game them.

“Newer immigrants can come from countries where the banking system is very shady,” Guzman said. “They may also have an immigration worry in the family—somebody who is undocumented—so they could have fear about filling out paperwork.”

Guzman said he believes banks can do a better job of being “more inviting.”

“I think banks could have diversity in their branches and in their commercials,” Guzman said. “I think the banks could do a better job of putting forth people who look like people in these communities. That could be a real plus.”

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