Everything is bigger in Texas!

Everything is bigger in Texas!

by The CAB Man Texas on October 27, 2016

Howdy folks – I saw this really great article in the Houston Chronicle titled “FDIC: Texas leads the country in ‘unbanked’ households.” This was another reminder that we are in one heck of a strong market.  Yep, everything is bigger in Texas!

This article tells me many things, but my first instinct is that it likely banks have made it so unattractive to work with them in Texas that many people (“unbanked” or “under banked”) simply prefer to go another route versus the traditional bank.  And, banks actually turn away many of the customers we serve for what I think are unfair reasons.  Many of our clients are very pleased to work with these customers and would like to ask for their business.  Whether the clients offer payday loans, cash advances, title loans, installment loans, or check cashing…it is quite likely they can suit the needs of the consumer.  Banks are lazy; customers in our industry typically need some above the norm assistance while carrying higher amounts of risk. Our clients understand this and will do the work with the customers seven days a week, in-store, online, via phone, email, or text!

Despite the fact that banks are being shunned for their unfair treatment (ahem, Wells Fargo) of U.S. consumers, and despite the fact that more consumers are saying “no thanks” to the local bank branch, the banks still make 4-5 times more revenue on overdraft / NSF charges than the entire “payday loan” industry makes in annual revenue last I checked.  Perhaps the CFPB should spend less time on our industry and more on the banks!

Using 2015 data, the FDIC measured “economic inclusion,” which is the term they use to label families who use mainstream financial institutions.

The study estimates how many households are unbanked, or don’t have bank accounts, and how many are under banked, or may periodically seek financial help from services such as title loans, payday loans and pawn shops despite having bank accounts.

Here are some statistics cited in the article:

  • 9.4 percent of households, or about 967,000, were unbanked in 2015.
  • 23.7 percent of Texas households were under banked.
  • Income of less than $15,000 per year: 25.6 percent unbanked, 29.5 percent under banked.
  • No high school diploma: 28.8 percent unbanked, 26.7 percent under banked.
  • Ages 25-34: 13.8 percent unbanked, 27.1 percent under banked.
  • Ages 35-44: 12.8 percent unbanked, 27.7 percent under banked.
  • About 16 percent of African American households were unbanked and 30 percent under banked.
  • About 18 percent of Hispanic households were unbanked, with 30 percent under banked.
  • In Texas, unbanked households logged the lowest savings rates at 17.7 percent.
  • Savings rates rose to 49.5 percent for under banked households and 59.5 percent for those considered “fully banked.”

What should business owners in our industry be thinking as they read the article?  What are the behaviors/traits of our customers?  How do we mold our services so they are in line with the behaviors/traits?  What services should we add and evolve into?


This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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