Worcester Business Journal

wbjournal.com | February 21, 2022 | Worcester Business Journal 17 Education initiatives Basic Banking for Massachusetts was established in 1994 to encourage the unbanked to have knowledge of options available to them. Set up by the Massachusetts Community & Banking Council's Banking Services Committee, it creates voluntary standards for banks to offer entry-level checking accounts. A Basic Banking account requires no more than $25 to open, charges a maximum $3 fee and provides at least 15 free withdrawals, including at least eight checks a month. In Central Massachusetts, several credit unions and banks offer these entry-level accounts, which can be opened online. e goal is to at least make the unbanked aware of their options. ey will then potentially establish themselves with banks so that they can experience the benefits to checking accounts and possibly electronic banking. Not to say there is any harm in keeping an emergency $20 in your wallet. W B A N K I N G & F I N A N C E F O C U S leaders foresee paper currency, ATMs, and physical branches to be with us for a decade or more. Customers who do their banking in cash are referred to as unbanked. Federal Deposit Insurance Corp. statistics show an estimated 5.4% of U.S. households as unbanked – with no one in the household having a checking or savings account at a bank or credit union – in 2019. In Massachusetts, for the same year, this number was 3.7%. "e 2019 data up ticked slightly from 2017," Murphy said. "However, it is a significant decline from 2015, when the percent of unbanked households in Massachusetts totaled 5.7%." Alden has seen unbanked customers becoming rarer. Some do it by choice for budgeting reasons, he said. Maybe they are paid in cash, and once their cash is depleted, they know they have used the money they have for the week or for the month. ey pay rent or other bills via money order. "If they use electronic payments, they aren't as easily able to track what they are spending," is their theory, he said. A common reason individuals opt to be unbanked is they think they don't have enough funds to deposit into an account without accruing fees, Murphy said. But without an account, consumers lose an opportunity to improve their credit scores if they had bounced checks in the past. Instead, they may shy away from reporting requirements altogether. "e primary reason we see, though, is a lack of funds," she said, unaware of no- or-low-fee and minimum balance accounts available. e unbanked are more likely to incur costs with check-cashing services or payday loans at the same time they are missing out on bank account benefits. No matter where customers fall in their banking practices, banks remain committed to serve them. Just as Cornerstone and Bay State in Worcester invest in mobile technology, they continue to invest in ATMs. Both Ahmed and Alden said banks respond to how customers want to do their banking and provide those options, catering to customers. For now, brick and mortar (and cash) are part of that equation, as are contactless mediums. At the same time, financial literacy for the unbanked continues, full steam ahead. "Some may not have access to technology or trust it for whatever reason, but we need to provide understanding," said Ahmed. Cornerstone and Bay State offer financial literacy to customers via personal guidance, blogs, YouTube presentations, and other social media efforts. Peter Alden, CEO and president, Bay State Savings Bank Massachusetts banking markets, by size Market Institutions Deposits Boston-Cambridge-Newton 116 $514 billion Greater Providence 26 $57 billion Greater Worcester 32 $25 billion Greater Springfield 18 $22 billion Greater Barnstable 10 $11 billion Source: Federal Deposit Insurance Corp., as of 2021

• Cover