A couple of weeks ago I went to this big annual conference for personal finance bloggers (or all independent financial media, as it has evolved into) called FinCon. I was incredibly honored and grateful to have the entire thing sponsored by CFSI after I wrote this piece for a contest they were having.
The Center for Financial Services Innovation (CFSI) leads a network of financial service innovators working to build better products for consumers. They do a lot of research, seed new ideas and expand points of view through activities like FinX.
What is FinX?
FinX was the very first FinCon-related thing I did while in Dallas. (Don’t worry–the tourist’s-eye-view of Dallas is coming up in a couple weeks!)
It was also the event I was most excited to participate in during my time there.
Essentially, we got together in teams and tried to perform a bunch of life tasks on a two hour lunch break. The catch?
We had to do it as unbanked persons.
Team Grey’s Fortunes and Failures
- Cash a payroll check.
- Cash a personal check.
- Buy a prepaid card and deposit money onto it.
- Buy some art supplies for our “niece”‘s birthday.
- Wire money to our “sister.”
- Get a money order.
And I’m pretty sure there were about 10 other things on the list that we didn’t even end up having time to consider.
We started off super optimistic. The neighborhood we were assigned had a Walmart, a bank where the payroll check originated from, a cash checking business, and a pawn shop—which we would have utilized had we made it further down the list.
We should have had everything we needed.
The trouble started when we walked in the door. The line to cash a check at Walmart was insanely, insanely long.
We found out that we were in less of a neighborhood and more of a retail mecca. That pawn shop was not happening; it was across a 4+ lane highway.
We continued on our journey to cash our checks.
The check cashing place wouldn’t do it.
While the traditional bank did cash the personal check, they wouldn’t cash the payroll check. They said that it was too new and that we should come back in a few hours.
The teller had already stamped the check, but did cancel the endorsement.
We headed back to Walmart and stood in that massive line again. When we finally got to the front, the woman working said she couldn’t accept the check because it had been stamped–even after being made aware of the visible cancellation of the endorsement.
We were stuck. We didn’t have time to wait until the check was cashable, and without the payroll check, we were limited in the other tasks we could accomplish.
Crystal bought the prepaid card, but couldn’t load it. When she called to try to put ten bucks on it, they wanted all kinds of personal information. Including social security number. To load $10 onto a fee-laden card.
We did manage to get some bananas as grocery shopping was on our list of things to do. But other than that, we failed pretty hard.
— SophisticatedSpender (@Crystalh8725) October 25, 2017
Frustration with the System
Afterwards, we all came back to sit down and talk about our different experiences.
I was in no state to be talking. I was mentally drained. I think that was the biggest thing that hit me; I expected the experience to be unpleasant and difficult, but I did not expect to be so exhausted afterwards that I would have a hard time forming a coherent sentence.
If I had had my wits about me, here’s what I would have said:
I think education is great. Truly. Give people knowledge and they can act upon it. I think it’s especially useful when structured as coaching to help an individual get through a specific situation.
But I don’t think the problem here is educational initiatives. The problem is that the system is horrible, and disproportionately punishes those who have the least. You can educate people all day about how they’re going to get hit with fees because they’re low-income. You could inform about the importance of emergency funds and linked checking/savings to avoid overdraft fees.
But that doesn’t matter too much if there’s not a bank in your neighborhood.
It also doesn’t change the fact that you can spend two hours trying to cash a check only to get turned down.
It doesn’t change the fact that because you were unable to cash that check, you might be hit with fees for being late on bills you were planning on paying later that day.
And it doesn’t change the fact that while I was going back to a meeting room to discuss the experience with colleagues, in real life Brystalifer would be going back to work, unable to cash the check until tomorrow. Hopefully.
This is my personal opinion, and does not reflect the opinion of any other person or organization, but I think we have to change how we regulate financial services–not just alternative financial services. But all of them.
To be predatory upon those who have the least is a disgusting way to get rich. I’m aware financial institutions are not fond of regulation, and that current regulation is what holds back a bunch of FinTech innovations in our country.
Which is why I’m not necessarily arguing for MORE regulation, but rather a complete overhaul of the system to berid us of these reverse-Robinhood-esque practices and open up the way to 21st century innovations.
Twenty-First Century Innovations
My solution may be completely unrealistic. The folks at CFSI recommended instead turning to twenty-first century innovations for solutions.
I’ve told you before about my love for apps like ActiveHours, and there are many more on the market. Some help you get a view of your overall financial health. Some serve as an alternative to traditional bank accounts. Some target extremely specific financial situations.
Ultimately, we can’t control regulation unless we really start pressuring our representatives. And we’d need a clear end game in order to do so. That’s something I simply don’t have.
But as consumers, we can control the ways we manage our money. If you have a smart phone anyways, find a few trustworthy apps that can help out with your current money goals. It won’t fix everything, but FinTech can be a huge help when traditional financial services have left you to slip through the cracks or simply don’t fulfill all of your money management needs.