The CDFI says its mobile unit allows them to serve underbanked communities before they’re able to open a permanent branch.
By Erica Sweeney
Having a bank account and easy access to a bank branch or ATM is something many people take for granted. But, in 2021, 4.5% of U.S. households, which comprises nearly 6 million people, were “unbanked,” meaning no one in the household had a checking or savings account, according to the Federal Deposit Insurance Corporation (FDIC).
While the rate of unbanked — which is more likely to affect low-income households and Black and Hispanic communities — has dropped nationally since 2009, certain areas of the country are seeing more bank branches closing and more residents without access to banking services.
The Bronx, New York, for instance, has some of the highest unbanked and underbanked (which refers to households where someone has a bank account but also uses nonbank financial services, like check cashing) rates in the country, according to the Association for Neighborhood and Housing Development. The New York City borough also has the lowest concentration of bank branches and saw 17 branches close between 2018 and 2021.
But, there’s an effort to change that.
The Bronx Financial Access Coalition, a partnership of four organizations, was formed between 2020 and 2022 to expand financial services and access in the Bronx. The coalition teamed up with the Lower East Side People’s Federal Credit Union to launch a mobile branch in July 2022.
“We believe affordable financial services to be a right, not a privilege,” says Aissatou Barry-Fall, CEO of LES People’s Credit Union, which is a nonprofit CDFI financial cooperative created in 1986. “Everyone really should have a minimum of a bank account.”
The mobile branch offers free checking accounts, savings accounts, credit builder loans, low-interest personal loans, financial counseling, and access to more than 30,000 fee-free ATMs, including ones located at many McDonald’s restaurants. It operates on a steady schedule and parks at a rotating lineup of locations in the Bronx, which the credit union lists on its website and social media pages each month.
“We’re delivering the same services as a physical branch,” Barry-Fall says.
Now, the mobile branch is serving credit union members and will expand its services to the broader community once it obtains approval from its regulator, the National Credit Union Administration, which Barry-Fall says they’ve applied for.
The mobile branch is providing a valuable service for residents of the Bronx, which has seen an influx of check-cashing services pop up, as bank branches have shut their doors, says Alicia Portada, director of communications and community engagement at LES People’s Federal Credit Union.
Check-cashing services typically offer payday loans and enable people without bank accounts to cash checks, but typically charge hefty fees. These companies often target low-income communities.
“What we see is our communities, especially minority communities, are being disinvested,” Portada says. “They say it’s because the communities are not profitable, and we’re seeing check-cashing places thriving.”
Members of the Bronx Financial Access Coalition, the credit union and local officials have held tours of closed bank branches and other events to highlight the need for more banking options in the area and educate the community about accessible, affordable financial services.
“That’s how we’re getting the word out and trying to engage the community and providing information,” Portada says. “We’re building a relationship with residents of the Bronx, and we know they’re going to share this information with other people. And, this is just growing and growing.”
Members of the community have been supportive of the mobile branch. Since it launched, Portada says the credit union has learned more about the community’s banking needs, which they’re using as “market research” to inform where to set up shop next.
The credit union plans to open a permanent branch in the Brox in the next few months. It will be its fourth location, along with branches in the Lower East Side, East Harlem, and Staten Island’s North Shore.
This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is developed in partnership with Next City.