People who have left or been forced out of the traditional banking sector are using financial products and services that are stripping wealth rather than building it through high fees, interest, and sometimes predatory practices. For the financially underserved who lack a savings cushion or access to reliable credit, there are few affordable financial options.

  • One in three Americans is financially underserved. In the Twin Cities, that number is approximately 194,000 households, 54.8 percent of households of color were financially underserved in the Twin Cities, as compared to 15.4 percent of white households.
  • Underserved households spend $1,100 to $2,400 on fees and interest alone each year amounting to a $173 billion marketplace.

The problems this data present is exacerbated by context in which it exists – income is often volatile and unpredictable, and small missteps or unexpected financial shocks can have a serious consequence on a household’s finances.

In 2013, initiated by the Northwest Area Foundation, thought-leaders from a cross section of foundations, nonprofits, and financial institutions came together to think nontraditionally and create a solution for Minnesotans to build wealth that can be scaled to a national level.

The Financial Access in Reach (FAIR) initiative introduces to the market a new solution that provides a safe, affordable, and effective way to transact, save and build credit. The product set targets the un, under, and unhappily banked and includes:

  • Checking account: With no account overdraft fees or monthly minimum balance requirement
  • Savings account: No monthly minimum balance requirement or monthly fees
  • Credit builder loan: A loan deposited and saved into a CD. On-time payments to unlock the CD can help build credit.

FAIR is filling a market gap and creating opportunity no only through the products themselves, but also through unique distribution partners and behavioral nudges. The products are offered in the places people live, work, worship, and receive services. Tools, communications, and nudges to act will help people stay on course to changing their financial lives.

Lastly, FAIR was built with and for consumers. It is based, in part, with the input of more than 150 financially underserved consumers who participated in listening sessions. The initiative is led by a cross-sector leadership team representing the communities it serves.