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What It’s Like To Live Without A Bank Account For A Day

Trying to conduct simple transactions at places like Western Union and Ace Cash Express taught me how much I take for granted my financial privilege.

What It’s Like To Live Without A Bank Account For A Day
[Photo: Flickr user Paul Sableman]

The challenge was simple, or so it seemed: Pay my bills and complete a handful of money-related errands before my work shift began at noon. It was harder than I ever could have imagined.

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In reality, I wasn’t handling my own finances; I was participating in a simulation of what it’s like to be one of the underbanked–that is, to be one of the 7.7% of Americans with limited access to traditional banking services. The Financial Solutions Lab, a spin-off of the Center for Financial Services Innovation (CFSI), put on the simulation for a group of entrepreneurs, nonprofit employees, and banking executives so that they could come up with new product ideas for addressing the challenges of cash flow management.

During the two-hour simulation, the group was split up into teams and given a series of tasks to complete. These included buying a general purpose re-loadable card (GPR) and loading it up with cash, cashing a payroll check and a personal check, completing a money transfer and then picking up a money transfer card from another team, and paying the balance of a monthly rent bill.

My team–Paul Breloff, managing director of the Accion Venture Lab, Ethan Bloch, the CEO of digit, and myself–walked around San Francisco’s Mission District, popping into the payday loan and cash advance outfits, with names like Ace Cash Express and Money Mart, that I had passed so many times before without even a second glance.

Our first problem came at Ria’s, a storefront where we planned to cash our checks and load up our GPR card. We ended up waiting for nearly half an hour while the store decided it couldn’t cash one of the checks because we couldn’t immediately get verification from the sender that it was legitimate.

Ace Cash was willing to take care of the checks and GPR quickly, but for a significantly higher fee. Still, Ace Cash refused to let us pay the $10 balance from our monthly rent bill. The transaction was “declined for unspecified reasons.”

Western Union presented yet another challenge. Upon arriving at the storefront, we were told that their system was down. Eventually, we were told that the other team instructed to pick up our money transfer could do so at any Western Union–but we were charged a $5 fee for our $30 transaction.

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Though we failed to complete our tasks, my team still won the competition. The other teams, apparently, finished even fewer tasks.

Normally, I take care of the vast majority of my financial transactions online. But as the FinX simulation made clear, the options for the underbanked are often limited to opaque in-person transactions that suck up large amounts of time. These transactions are unreliable; one team couldn’t pay their rent check because of a systems failure at a storefront, and Western Union failed us all. Customers have to wait on long lines, and there are few options for self-service.

All of these pain points are fixable, and there are plenty of startups that are working in the underbanked financial services space. None have really taken off yet, but CFSI is hoping that its new Financial Solutions Lab–a $30 million, five year initiative sponsored by JPMorgan Chase & Co. that will offer funding and resources to financial security entrepreneurs–will provide new solutions for financial security.

For now, banking without a traditional bank account remains a time-consuming, exhausting experience.

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About the author

Ariel Schwartz is a Senior Editor at Co.Exist. She has contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD Magazine and more

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