Millions of Americans are unbanked and cut off from formal financial services. They turn to check cashers, payday lenders, and pawn shops for transaction and lending services—at a high price. The unbanked and the underserved can expect to spend more than $40,000 in check cashing fees alone over a lifetime.
What is the research about?
This brief explores the First Step Program, a project created by one of Filene's i3 teams. Credit unions have a crucial role to play in the efforts to educate and serve the unbanked and underserved, but they can’t solve the problem alone. Many of these consumers avoid traditional financial institutions due to cultural bias, a lack of financial education, or the view that banks and credit unions are unwelcoming, inconvenient, or untrustworthy. The First Step Program helps credit unions overcome these barriers by partnering with community-based organizations (CBOs) that the unbanked already know and trust.
What are the credit union implications?
Credit union benefits from implementing the First Step Program include:
- Recruit new members.
- Demonstrate commitment to serving the underserved and people of modest means.
- Contribute to the local economic development.