In 1986, the bottom 50% of earners (over 70 Million) took home 17% of the nation’s income. By 2007, they took home only 12%, Meanwhile the top 1% of earners now accounts for 23% of America’s income. A brute fact is that half of Americans are struggling, scrimping, and often being swallowed in our modern economy. Furthermore, half of America needs a financial institution they can trust.
In the midst of all this, 28 million Americans, most of them in that low-income category are un- or underbanked. Minorities, single parents, and those with little education are the most likely to operate without the protection of a financial institution. Saddest of all, 41% of unbanked households say that opening an account in the future is “not likely at all.”
Credit unions are not and cannot again be the same institutions founded during the Great Depression. The market has changed too much, and so have consumers. But only 18% of banks in a 2009 FDIC survey identified better serving underserved markets as a priority—and that’s with CRA looming over their heads. Why? Because they question the profitability of the endeavor. The work credit unions do and can do to improve the lives of the bottom 50% is essential to the future of America. When 41% of the unbanked say they don’t have enough hope for the future to even open an account, our country and credit unions need to rise to that challenge.
Although credit unions cannot change the wage gap, they can close the banking gap. Not because they fear CRA or taxation. Not because they can make it purely profitable. Credit unions seek out the unbanked because they live, work, and worship with us. They serve us and our employees. They go to school with our children. And if credit unions are not around to seek them out and serve them, then we will lose something essential: Access to the American Dream, and possibly the cooperative self-help institution itself.
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Seth Godin wrote a very interesting blog post today about marketing to the bottom of the pyramid. Worth a look to all of you who are interested in helping the most overlooked segments of the populations. http://sethgodin.typepad.com/seths_blog/2010/09/marketing-to-the-bottom-of-the-pyramid.html
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