How access to banking has changed since the pandemic

GRAND RAPIDS, Mich. (WOOD) — Banking reports show financial institutions have been closing at faster rates, especially since the start of the pandemic.

Since the start of the pandemic, the number of bank branches nationwide is down 5.6%, according to the Federal Reserve of Philadelphia . The Fed’s report also said a number of branch losses were some of the largest banks in the country, which reported “most branch losses and desert growth happened in higher-income, suburban, and predominantly white communities.” Rural communities in West Michigan like Newaygo, Ionia and Ottawa counties have the potential of developing a banking desert, according to the Fed .

“The state of Michigan reported recently that it costs Michiganders about $3,000 a year in alternative financial services fees when they don’t have access to traditional financial services,” Dallas Lenear, the founder and executive director of Project GREEN in Grand Rapids, said.

A banking desert is defined as a census tract without a physical branch within a certain radius: 2 miles for urban communities, 5 miles for suburban and 10 miles for rural communities.

Other barriers to banking access may be poor internet — people who live in rural areas may not have broadband, which may limit them from using online options. Reports show that more people have sought out online services since the onset of the pandemic, in turn making banks relying on such services more.

Michigan as a whole fairs well in banking access, Patricia Herndon with the Michigan Banking Association said.

“There are all kinds of opportunities for people to still bank and still connect with a person in a rural environment,” Herndon said. “Use the Upper Peninsula as an example: People are used to driving more than 10 miles to the bank, but they’re also used to driving more than 10 miles to go to the grocery store. So that is something they become used to, but we do support the growth of broadband access in the accessibility of broadband in those rural areas.”

Further study is needed on banking closures, but the data we do have reveals that certain demographics more likely to be affected:

“Areas with high concentrations of lower-income, Asian, Black, and disabled residents, as well as racially diverse areas, lost branches at a disproportionate rate,” the Federal Reserve Bank of Philadelphia reported.

Project GREEN — which stands for “grassroots economic empowerment network” — is a Grand Rapids-based organization working to combat systemic banking barriers.

“Our vision is turning everyday people into money heroes and our mission is to help families rewrite their financial legacy,” Lenear explained.

The Michigan Department of Insurance and Financial Services is running programs for banks aimed at facilitating economic advancement.

“They are encouraging financial institutions to lower the barrier so that people can access accounts,” Lenear said. “So many of the standards include accounts that have no overdraft, account activation, closure dormancy, inactivity or low balance fees. These accounts also have limits on ATM fees. There is a minimum on opening deposits at least $25 or less and there is a limit on monthly maintenance fees.”

On the state of Michigan’s website , you can find a list of banks and credit unions that are participating.

“I would encourage people to think about and actually look at where the branches are located with whatever institute they are pursuing because there are some great credit unions that have great products, but their locations are not easily accessible in the 49507 zip code (in southeastern Grand Rapids),” Lenear said. “But on the flip side, there are great banks that have brick-and-mortar locations that may not have the accessible accounts that people need. So I’d just encourage people to start with the state of Michigan’s website, look at the accounts that are offered there and look at where the branches are located relative to their work and their home.”

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