How correspondent services may help to combat barriers to member services?

by Justin White, NAFCU Compliance Blog

The Consumer Financial Protection Bureau (CFPB) released two separate reports on June 21st documenting access issues and consumer finance issues in the southern states of the United States. The CFPB writes that the purpose of these Data Spotlights is “to identify gaps in branch presence and bank account access, and capital access such as mortgage lending and small business lending.” The following states are included and represented as the southern region: Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. The first report highlights banking and credit access in the south. The second report focuses on consumer finance issues in rural southern communities. This compliance blog will discuss the report outlining banking and credit access issues in the southern region of the United States and how a federal credit union may open access to member services.

Banking access

One of the leading causes of a decrease in banking access is the closure of brick-and-mortar branches. According to the report, this issue is more apparent in the southern region than any other region in the United States with the southern region having fewer branches per resident than other regions in the United States. The report highlights the connection between physical branch locations and the access to services such as tellers and ATMs. Even if there are branches within communities, the CFPB found that these branches are sometimes located on highways and in cities, making it harder for people to reach these points of service.

Compounding the issue of banking access is the barrier to establishing a bank account. The report raises concerns that barriers to establishing a bank account may also have residual consequences in access to credit. The report also lists insufficient funds to meet minimum balance requirements, distrust in financial institutions, privacy issues, and fees as other factors for why segments of the population do not have access to services.

 

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