Many people across the Tampa Bay region don’t have an active bank account.
Some don’t have an account whatsoever. Others have bank accounts but still rely on quicker and costlier alternative financial services, like payday lending, pawn shops and check cashiers.
Mark Smith, the financial stability manager for United Way Suncoast — which has a five-county footprint covering Hillsborough, Pinellas, Manatee, Sarasota and DeSoto counties — said there's a word for that.
“Underbanked,” Smith said. “Being someone who may have a [bank] account that they may not be utilizing because they’re still using financial services such as payday loans and check cashing.”
Residents often cite fear of bank fees, poor credit and falling short of minimum balance requirements as reasons for seeking out non-bank services, according to a 2021 survey by the Federal Deposit Insurance Corporation (FDIC).
A household that completed a non-bank transaction in the past 12 months, including money orders and check cashing, or that used services like rent-to-own or payday lending are defined as underbanked by the FDIC.
A large percentage are underbanked
The rate of underbanked individuals ranges from 8% to 17% in counties across the greater Tampa Bay region. At the top of the charts, 17% of DeSoto County residents are underbanked, according to data from United Way Suncoast.
Hillsborough County mirrors the national average with 14% of all residents being underbanked — enough people to fill Raymond James Stadium nearly three times.
In Pinellas, Sarasota and Manatee counties, the rate of underbanked individuals averaged nearly 10%.
Smith also helps lead an initiative that’s aimed at reducing underbanking rates across the Tampa Bay region.
The program, which is called Bank On Suncoast, is part of a national movement that brings together financial institutions, local governments, federal bank regulators and community organizations. It’s one of 106 coalitions operating across the U.S., Smith said.
Smith said the program works to certify local financial institutions signaling to first-time bank customers a “safe, affordable, not-fee driven” product.
“It gives people the opportunity to have a relationship with an institution and not generate fees as they would if they were utilizing alternative financial services, such as a payday loan or a check cashing service,” Smith said.
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Financial literacy and transportation to banks are the biggest barriers to banking in North Sarasota, BayFirst Financial assistant center manager Joe McKenzie said. BayFirst Financial is one of 29 local financial institutions that is a certified partner of Bank On Suncoast, according to the website.
McKenzie works out of a branch in Newtown, a historically Black neighborhood in Sarasota, where he said systemic barriers to banking also exist.
“Our mission here is really to address the issues of folks in this community who are unbanked and underbanked. And we have actually opened an office in this community … to ensure that people who want a bank account can actually open one,” McKenzie said.
In Tampa, Young Money Solutions recently joined the Bank On Suncoast coalition.
The barriers to banking
Co-founders Bryan Ferguson and Howard Johnson said their mission is to fill a gap of financial knowledge that often exists in communities of color. They founded the financial literacy nonprofit in 2019 after immigrating to Tampa from the Bahamas.
“A lot of times individuals go to those alternative places, like check cashing places … just because they don't have the education,” Ferguson said.
He said this trend is often exploited by the prominence of payday lending and check cashing locations in certain neighborhoods, like East Tampa and Sulphur Springs.
Johnson said there’s other barriers for immigrant communities in Tampa, too.
He said he’s noticed a chilling effect for immigrants living in Florida right now that’s tied to the tightening of legal status and identity verification that’s impacting hospitals and employers.
“You need proof of address, you need a social, you need some of these documents that they may lack, and also — if they do have some of them — there's still a fear because immigration is a very big hot button topic and political issue,” Johnson said.
He said this fear impacts immigrants who legally reside in Tampa and is likely keeps them from seeking services at a bank or credit union.
“There’s a natural fear that is pervasive in the immigrant community," Johnson said, "and that's because of a lack of financial literacy, and that creates the problem."
Gabriella Paul covers the stories of people living paycheck to paycheck in the greater Tampa Bay region for WUSF. She's also a Report for America corps member. Here’s how you can share your story with her.
