Understanding the US’s “Unbanked” Population

Booz & Company are highlighting a new study that provides some insight to households in the US that remain outside the banking system.  Their analysis suggests that Latino households are more likely to be among the unbanked:

According to the FDIC data, about 7.7 percent of U.S. households (or a little more than 9 million) are unbanked. On average, these households have annual earnings of US$18,600, resulting in an estimated $169 billion in income that never flows through a bank or credit union. About $52 billion of this total is earned by the 2.5 million unbanked Latino households nationwide, which have an average annual income of $20,800.

Although the researchers stress that all unbanked customers, regardless of demographics, can be targeted by financial institutions, several factors make the Latino population particularly attractive. Many Latino households feature more than one adult generating income, and the group’s workforce participation is high — for example, an estimated 90 percent of Virginia’s adult male Latinos are in the labor force, compared with 74 percent for all male Virginians. Latinos are also the fastest-growing ethnic group nationwide — the U.S. Census Bureau reported that the number of Latinos grew 24.3 percent from mid-2000 to mid-2006, to 44.3 million. (The national population growth rate during that period was 6.1 percent.)

Some unbanked Latinos are undocumented aliens, who would have trouble opening an account without a Social Security number. But many others are just put off by deposit requirements and language barriers, and turn instead to check-cashing stores and payday lenders that cost more to use.

This suggests that communities with a high Latino population may have access to more financial resources than official records indicate.  The full story is here.

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