In the last year, some people fared better, some worse. But when it all shook out, more people are worse off today than a year ago, according to the Financial Health Pulse 2022 U.S. Trends Report.
The Financial Health Pulse reports that 70% of people are not financially healthy — they are either financially vulnerable or merely coping. These numbers align with what we’ve observed in the latest YouGov polls from August 2023.
One word makes a big difference. An approval can mean keys to a home, the capacity to start a business, an onramp to wealth. A denial can mean it’s back to the drawing board for how to make rent or get groceries.
What if we’re saying no when we could be saying yes? What if, as an industry, we’re overweighting lender risk and underweighting applicant capacity?
At Sawa we believe that more people are creditworthy than they get credit for — and that we can ameliorate this problem by making more sophisticated assessments of creditworthiness, using behavioral science to encourage payback and engagement with creditors, and tapping into the power of community. Here’s how:
In 5.9 million U.S. households, no one has a bank. Not a checking account. Not a savings account. They don’t “go to the bank.” These are the unbanked. Who are they and how do they operate financially in 2023? Let’s take a closer look.
Who are the unbanked?
The unbanked are not a static group. As Lisa Servon writes in The Unbanking of America: How the New Middle Class Survives, “Many people — not just the poor — move in and out of banks.”¹ Certainly households that are white, married, able bodied, higher income, and more educated are less likely to be unbanked — but this doesn’t in and of itself tell me much about the banked or the unbanked. It tells me much more about the banking industry.
Americans currently spend $30 billion annually on fees and interest to borrow small amounts of money from — not the banks — but alternative lenders like pawn shops, loan sharks, payday lenders, auto title loan services, buy-now-pay-later, and rent-to-own, according to The Pew Charitable Trusts. They use this credit to deal with income volatility, weather financial shocks, and simply pay their bills.