Sixty percent of low-income neighbourhoods in California do not have any access to banking services or credit unions, and residents are forced to use check cashing storefronts and payday lenders who charge up to 400% on loans. When most low-income residents in San Jose, California, cash checks, they pay a 5% banking service fee, and conduct their business with little human interaction through bulletproof glass.
However, at a Micro Branch, the same customer can sit one-on-one with a teller at a desk, only pay a 1% fee, and learn about checking and savings accounts, along with other banking financial services.
Micro Branch is a project from the Center for Community Self-Help, which is a non-profit credit union which began in North Carolina in 1980. Self-Help, specializing in home loans to low-income families, has since outperformed others who offer mortgages to much more affluent families. Research by the University of North Carolina covering twelve years of lending by Self-Help has shown that low-income borrowers actually performed very well when offered responsible loans at fair rates. In fact, defaults on Self-Help’s loans were three times lower than those made to similar borrowers between 2004 and 2008. They are now hoping to do the same with expanded banking and financial services through their Micro Branch operations.
Steve Zuckerman, who founded the California office, says,
“We want to stand up in Washington and Sacramento and other state capitals that regulate the banking industry and do what we did with mortgages — advocate for more responsible policy from the position of experience. Our efforts in California are not only helping hardworking families, but also building on that experience.”