Built Environment – Banking Deserts

Methodology

Data for banking deserts means are census tracts without a bank branch located within it or within a certain radius from its population center. That radius is determined by the type of community:

2 miles for urban communities

5 miles for suburban communities

10 miles for rural communities

A potential banking desert is a census tract that can become a banking desert if one bank branch closes. Bank branches’ presence in lower-income communities is linked to more mortgage originations and lower interest rates. Declining access to traditional banking services might also drive consumers to alternative financial services like payday lenders and check-cashing services that can raise the overall cost of banking and inhibit opportunities for saving.

Living in a banking desert may impact some consumers more than others. There’s still a high demand for access to a physical bank branch with a teller for the following demographics:

1.
Lower-income consumers

2.Older adults

3.
People living with disabilities
4.
Rural consumers

While many financial institutions offer online and mobile banking, consumers need three key elements to use these services:
1. A modern digital device

2.
Internet access

3.The ability to navigate websites and apps

Unfortunately, home broadband adoption remains out of reach for many lower-income, rural, and older populations, as well as people of color. Without true digital inclusion–high-speed internet, devices, and digital skills–these consumers may find it challenging to fully embrace online banking services.