Access to the basic banking services necessary for prosperity should be a human right, yet millions of Americans lack such access. The 2020 election presents an opportunity to change that.
My education in finance started early. Brick-and-mortar banks lined the streets in Rye, where I grew up. When I was a fourth-grader, my mom took me to our local TD Bank to open checking and savings accounts. At the time, all I cared about was having a place to park my cash earned shoveling snow and showing off my debit card to my friends.
Later, that introduction to the financial system meant more to me. I could withdraw money at an ATM, order an Uber, buy textbooks cheaper through Amazon and pay my rent online.
Those banking services made me a productive, trusted member of society; TD looked at me and said, in essence, “You are important.” However, private-sector banks today look at many other Americans and say, “You don’t matter.”
In October, the Federal Deposit Insurance Corp. released its National Survey of Unbanked and Underbanked Households, which measures the inclusiveness of the U.S. banking system.
The FDIC found 6.5 percent of U.S. households, or 20.5 million people, are “unbanked,” meaning they lack access to a checking or savings account. Additionally, 18.7 percent of U.S. households, or 64.3 million people, are “underbanked,” forced to use products and services outside of the banking system, like payday loans and money orders.
Unbanked Americans cannot build credit histories for future borrowing, receive direct deposits from employers, save or borrow to withstand financial or medical emergencies, or even run daily errands. Being unbanked sticks millions of Americans in a cycle of poverty. Underbanked Americans turn to alternative financial institutions for informal banking services. These institutions capitalize on underbanked Americans’ exclusion from banks by charging extortionate fees for services.
I’ve spent the past year at Duke University’s Sanford School of Public Policy researching what causes financial exclusion across 137 countries and found systematic variations in who has access to banks’ services.
In the United States, financial exclusion is skewed toward uneducated, rural and minority households. Pew Research Center’s 2016 electorate survey found those same demographic groups propelled Donald Trump into the White House in 2016.
Democrats running for president in 2020 are now listening.
Sens. Bernie Sanders, Elizabeth Warren and Kirsten Gillibrand have endorsed retail banking services at all 30,000 U.S. post offices. Sen. Cory Booker introduced legislation to ban bank overdraft fees. Sen. Kamala Harris opposed legislation that would expand the power of payday lenders who offer consumers predatory loans.
However, because financial inclusion policies target voters who helped elect Trump, Democratic candidates should call for legislation that requires private-sector banks to expand basic checking and savings accounts to all Americans. They should hold banks accountable in setting and meeting financial inclusion goals for underserved demographics. And they should commit to financial technology research, development and investment through products and services that cater to the financially excluded.
To all Democratic candidates: If you want to win back some of those Trump supporters, be sure your platforms provide all Americans a basic right — access to banks’ financial services.
Ned Sullivan is a senior at Duke University studying public policy, economics and ethics. He is writing an honors thesis on financial exclusion.