With two out of every five Columbia households failing to have access to most basic banking services, the city of Columbia and local banks have kicked off a program aimed at helping provide people with the tools to become financially stable.
The program, “Bank On” Columbia, was launched in January by the city’s Community Development Department, along with Columbia officials and representatives of three bank companies – BB&T, South State, and TD Bank.
Basic elements of “Bank On” Columbia include a workshop series that teaches people the basics of available banking services and how to manage their accounts, an affordable home loan program and individual development accounts.
“We want to make sure that we run the gamut,” said Councilwoman Tameika Isaac Devine, who has worked over the past three years to bring the “Bank On” program to Columbia, “and have a full array of services and products that will help empower our citizens, include our citizens and make sure that they have the tools necessary to be part of the economic vitality of the city of Columbia.”
The program offers participants who may be new to banking accounts or those in need of second chance accounts due to negative banking histories low-to-no cost checking and savings accounts, steering them away from high cost services offered by payday lenders, title loans and pawn shops.
“Until you know someone who has been caught in the cycle of payday lending or has not been able to get their feet on the ground as far as having a financial foundation for their family, it is hard to believe how important just having a banking account is,” Devine added.
Devine first heard of the Bank On program while attending a National League of Cities conference. A member of the Liberty Fellowship class of 2013, Devine said she made Bank On her project to benefit her community.
Columbia ranks above the national average in the percentage of Columbia households that fall into the categories of “unbanked” or “underbanked,” according to the Federal Deposit Insurance Corp., which conducted an extensive study in 2013.
According to the federal bank regulator, 12.5% of Columbia households did not have any kind of bank account compared to the national average of 7.7%. Meanwhile, 27.2% of the city households were labeled “underbanked,” meaning they might have a savings or checking account, but not a credit card, car loan or mortgage through a bank. The national average for underbanked households is 20%, the FDIC said.
The FDIC study indicates that the situation appears to be worsening. Back in 2011, 7.4% of Columbia households were unbanked – nearly 5 percentage points lower than 2013. The agency’s survey found 16.4% of households were underbanked in 2011, more than 10 percentage points lower than
“For a lot of people, I think … it’s based on what you know,” said Deborah Livingston, director of the city’s Community Development Department. “If your family went to finance companies or cashed checks at the grocery store, they weren’t as comfortable going to a bank. I think a lot of people of lower wealth thought banks were just for people with a lot of
The program is open to anyone living within the Columbia city limits but there are certain restrictions that could prevent someone from opening an account.
To participate, applicants will be advised to participate in the Start Fresh! Financial Education Workshop Series, which began in January. The series offers information about banking, budgeting, saving, establishing and building credit, home ownership, and life skills.
The education component is essential to making Bank On work, said Nate Barber, senior vice president at South State Bank and a champion of the program.
In some cases, people who fall into the unbanked category did not handle a checking account well, Barber said. “Their only option is going to a pawn shop, check cashing, payday lenders, liquor stores. That’s why a personal finance program is important.”
With most routine banking services being conducted electronically via ATM and the Internet, people may need to have a bank account just to deposit their paycheck.
Barber learned of the Bank On program when South State acquired The Savannah Bank in 2012. In Savannah, nine local banks offer no- and low-cost checking accounts for those who have never had accounts before or who have had trouble managing an account in the past.
The Savannah program estimates that more than 1,000 new accounts have been opened since its launch in 2009.
“A checking account is the first step,” Barber said.
Published in Feb. 15, 2016, print issue of Columbia Regional Business Report