The Biggest Challenges Facing the Future of Finance

The biggest challenge is the limitations of traditional banking. Many underdeveloped areas still lack a physical bank branch

Despite the efforts of organizations like the FDIC to promote financial inclusion, a significant portion of the population in the U.S. remains unbanked, especially in the South and rural areas.

According to the Urban Institute, Black Americans are disproportionately affected by unbanked status, with 14% lacking a bank account compared to 5% of White Americans.

Moreover, new analysis from the Center on Budget and Policy Priorities (CBPP) of U.S. Bureau of Labor Statistics data shows that, in 2023’s second quarter, Black women over 65 are the poorest demographic group in the richest nation on Earth.

The report, ‘Poverty Rates Remain Elevated in 2023,’ also found that the unbanked are disproportionately affected by poverty.

It’s no secret that the American financial system is fundamentally unequal, and these statistics highlight the stark realities of inequality in the U.S.

The FDIC report also found that lack of trust in banks was the second-most cited main reason for not having an account in 2021.

It is clear that there is a lack of trust in the banking system, which may be due to decades of bank customers facing denial, negligence and greed from the institution.

The Consumer Financial Protection Bureau described banking access in the southern US as ‘banking deserts’ with no access to credit unions or banks. The unbanked population was almost double in rural areas.

In its report on banking access, the Consumer Financial Protection Bureau described the lack of access to credit unions or banks in the southern part of the U.S. as ‘banking deserts.’

The report, titled ‘Unbanked, Underbanked, and Vulnerable,’ stated that 43% of Black households in the southeastern region of the U.S. were unbanked in 2022, compared to 12% of White households in the same region.

The unbanked rate was almost double in rural areas compared to urban areas. In addition, the report found that the unbanked were more likely to be younger, less educated, and have lower incomes. They were also more likely to be renters and to have experienced a recent job loss or income reduction.

The report also noted that the unbanked were more likely to use alternative financial services, such as payday loans, tax refund anticipation loans, and money orders. These services could be very expensive and could trap consumers in a cycle of debt.

The report made several recommendations for increasing financial inclusion, such as expanding access to government benefits programs, investing in financial literacy education, and creating new products and services that met the needs of unbanked consumers.

The report also discussed the role of technology in financial inclusion. It noted that technology could be used to expand access to financial services, reduce the cost of financial products and services, and improve the quality of financial products and services.

The report concluded that financial inclusion was essential for economic growth and social mobility. It urged policymakers, regulators, and industry stakeholders to work together to increase financial inclusion in the U.S.

Despite the efforts of organizations like the FDIC to promote financial inclusion, a significant portion of the population in the U.S. is still unbanked, especially in the South and rural areas.

According to the Urban Institute, Black Americans are disproportionately affected by unbanked status, with 14% lacking a bank account compared to 5% of White Americans.

Moreover, new analysis from the Center on Budget and Policy Priorities (CBPP) of U.S. Bureau of Labor Statistics data shows that, in 2023’s second quarter, Black women over 65 are the poorest demographic group in the richest nation on Earth.

The report, ‘Poverty Rates Remain Elevated in 2023,’ also found that the unbanked are disproportionately affected by poverty.

It’s no secret that the American financial system is fundamentally unequal, and these statistics highlight the stark realities of inequality in the U.S.