In many areas of the world the banking, system is either scare or completely absent, which create a phenomenon known as Banking Desert. In these areas access to banking services like credit, loan, saving accounts almost lost or non-existence, this condition leave the communities in financial problems. This problem of banking desert, arise because of no physical appearance of banks in the rural or low-income urban areas.
And this lack of physical presence, make difficulties for residence to approach the banking services. But communities make admirable effort for their development. In this way, Communities leads to the innovative and attractive roads for thriving without depend on the traditional banks. In this content we will discuss that exertion which communities make for solving their financial disadvantages. Here are some key points that follow by communities which are thriving despite these challenges.
Banking desert
- No branch of bank on the road or within 10 miles distance on the track is the banking desert defined by U.S. Census.
- Â Less than 25% located in Metropolitan Statistical Areas (MSAs), while the majority of banking desert in the rural areas.
- Unbanked and under bank people are not related to the banking desert.
- Alternative financial service are available for the people who live in the area of banking desert either do not have any bank service like account cashing depositing the money in the account.
- Reason of the Banking desert is closure of mostly bank branches that are under performing and increase the interest to approach the Digital banking system.
The Rise of Community Financial solution:
The establishment of Community-based financial solution, prove to be a good and amazing step to solve the problems those arose by banking desert. There are many platforms, institutions and ways through which the difficulties can be solve. Microfinance organization, credit unions, community banks and institutions have stepped forward to fill the blank, create by banking desert. These communities try to understand the resident’s need and provide their best for make sure the public’s access to financial services that are tailored to those need. So in this way these solutions create peaceful climate in the combat areas. So we will discuss the some kind of effort that made development in the community without traditional banks in rural and low-cost urban areas.
Alternative Financial Services:
Residents often create the alternative financial services to solve their daily bases financial problems such as credit, saving accounts and other circumstances. Residents make the Community development financial institutions (CDFIs). And online banking system has offer great accessibility of banking services, pay similar services of traditional banks. Online platforms and Mobile banking apps provide the innovative and awesome banking services.
Credit Unions: A community-centric Approach
Credit unions are cooperative members which provide the best system for saving money and make sure the public’s approach to the loan at adaptable prices. And unlike traditional banking system credit unions return amazing profit without creating any problem.
Community commencement
By creating community banks and credit union that are particularly designed for serving the needs to residents, communities have taken the whole ad completely matter in to their hands. These institutions specifically focus on public’s access on financial education and affordable loan. These institutions provoked the public to make better financial decision.
Microfinance: Maintain Entrepreneurship
Microfinance institutions offer small loan to traders or merchants and little business opportunity that do not competence for traditional banking system. These loans can be beneficial for the member of that community, looking to start or expand the business. Develop economic growth at not international level but at low-cost urban and rural areas. Microfinance institutions help us to stimulate the cheap and local economy, and If a capital get the full approach of this system, poverty can reduce day by day.
It is the readiness and ability to develop, organize and run a business enterprise, in order to make perfect profit along with its disadvantages and uncertainties. In entrepreneurship, the traders invest in one or more business, bear the risk and also enjoy their reward. It is the pursuit of managing, starting and scaling a business with the admirable abilities. Microfinance banking system use cookies to enhance and personalize the public to provide them update version.
Postal banking
Bank services provide by the post office. As a weapon and instrument to solve the problem of banking desert, postal banking system has been proposed in some countries. In this procedure, post offices offer the special and important banking services, thus buying securities with their widespread presence. So this is also an innovative way to reduce the feeling of banking desert system.
Companionship between technology companies and bank
To understand areas, collaboration between fintech companies and bank can help to extend the banking services. Without any need of physical bank branches this partnership can leverage banking services and innovative financial products.
Government and policy mediation
In some case government intervene in the dispute of banking desert and policies aim to reduce this problem as soon as possible for the sake of country development. This can include, create the funding system for community development financial institutes (CDFIs) and operate incentives for banks in the underserved areas.
Financial literacy congress
To help the resident, community group and non-profit organizations sometime arrange the financial literacy programs, just help to know the public how understand to use the digital banking tools, manage the money and pass over the ship the world of loan and credit. These programs also empower and provoke the public to make better financial decisions. The financial meeting, prove to be more informative and amazing to solve the financial problem.
Peer-to-peer liability
The internet has enable the rise of friend to friend or colleague to colleague lending and also crowd funding platform, which connect the people who need or look for loan to those people who want to invest. So in this way, this platform, provide ability to thriving without traditional banks.
In short:
In short, communities in the banking desert areas strive to found the innovative and adorable roads to lead the success. To overcome the lack of banking system, communities use the alternative financial services, technologies and commencements to meet the banking needs of residents. As the world move toward the most updated version of everything , the information learn from the residents how to provide the financial and banking services to the low-cost urban and underserved areas globally.