The Norman Transcript

Business

June 23, 2013

Thousands of Oklahoman residents shun banking services

NORMAN — Banking has never been easier, but that is not enough to convince thousands of Oklahomans to park their cash in a checking account.

Oklahoma has one of the highest percentages of unbanked and underbanked households in the nation, at 34 percent, according to a 2011 survey by the Federal Deposit Insurance Corporation. About 11 percent are unbanked.

Unbanked refers to having no checking or savings account. The underbanked have a checking or savings account but, like many of the unbanked, use “alternative financial services” such as non-bank money orders or payday loans.

Experts count these groups to measure how many people are alienated from the mainstream financial system, which is the gateway to building savings and often the cheapest, most secure way to make transactions.

People with little or no relationship to banking are less likely to save or own assets such as a house or car. They also are more likely to spend too much on fees for services such as check cashing, experts say.

Lack of banking is most prevalent among low-income and minority groups. In Oklahoma, more than one-third of African-American households and nearly four in 10 Hispanic ones are unbanked, according to the FDIC survey.

People shun banking for various reasons. They may believe they don’t have enough money to get a checking or savings account. They may feel they don’t need or want an account.

Some are afraid to open an account because they had bad experiences with banking fees. Others may lack the identification requirements to open one.

The unbanked and underbanked often seek out faster, more expensive services, such as pawn shops, tax-refund-based loans and prepaid debit cards.

People use unconventional services because they meet certain needs, said Tammy Edwards, vice president of community development at the Federal Reserve Bank of Kansas City. Consumers like having a one-stop place, quick cash, and convenient locations and hours of operation, she said.

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