Is it really the Right Time to Democratize the US Banking System?

To get an idea of how far human beings have come over the course of time, it’s wise to look at how the technology that we have developed has made services and products – especially those that used to only be available to the upper classes – more and more available to just about everyone, and more affordable to boot. Computers, both home computers and mobile devices, breakthroughs in long distance communications, new forms of energy creation and storage and faster means of travel are just a few of the things that spring to mind when we think about serious advances having taken place. All of these industries have been democratized by technology, which has helped to created possibilities that never used to exist for billions of people all over the planet.

One industry that continues to lag behind with regards to democratization, however, is the financial industry. This is true both here in the United States and all around the world. For the folks that have plenty of money, checking accounts are free, it’s easy to get lines of credit and fees for financial accounts continue to drop. For the rest of the world, however, earning money and moving it around comes with a hefty price gag. For example, in the US, people can easily fork out over $60 a year to maintain an ordinary checking account, ATM transactions can cost $3 a pop and it is not unusual to pay $30 or more if you bounce a check.

It gets even more expensive to deal with money if you cannot afford to keep your funds in a bank account. Anyone who has had to rely on check cashing services, wire transfer or other alternative financial services can tell you that this is an absolute truth. It can become almost like working a second job just to have enough time to access your funds when you rely strictly on alternative financial services. And with time equating to money, the truth of the matter is that doing so makes it seem like people are bringing in less money for all of the hours that they put into their jobs every week. This makes paychecks yield less cash, while bills become more expensive than they ought to be.

Consider this, there are over 2 billion – with a “B” – people around the world who do not have access to even the most basic of financial services. Even simple financial transactions, like getting paid at work, getting the bills paid or sending money to family members, can turn out to be frustrating, time consuming and all-too-often very expensive.

Some who are not having to deal with alternative financial services may think that this is no big deal. The truth is, however, that it all boils down to a state of counterproductive personal economic practices that millions of people have to go through. There have been studies published that prove people who are able to achieve financial inclusion – which is essentially having a checking account and using it a few times a month – they are more likely to invest in education and/or start new businesses. Research continues to prove that financial inclusion is not just good for individuals, but it also helps to spur economic growth and to radically reduce the current state of income inequality.

Certainly, financial democratization is a complex issue, and is not something that will ever happen overnight. That being said, however, we have all seen the failings and inequalities prevalent in the current banking system, so maybe a bit shake up in the near future is just what the banking industry needs in order to experience some very real, very positive changes that will ultimately reverberate throughout the United States.

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