Banking on the 'underbanked'

2011-04-14T00:00:00Z Banking on the 'underbanked'By Bowdeya Tweh, (219) 933-3316

GRIFFITH | With a message of "everyone is welcome," local bankers and community organizers launched an initiative Wednesday to provide banking services to people who they believe can benefit from them.

Bank on Northwest Indiana aims to serve people who don't have bank accounts or are paying high transaction fees at alternative financial operations.

Participating institutions, including Centier Bank, Citizens Financial Bank, First Midwest Bank and Peoples Bank, will allow people to open and maintain free or low-cost checking or savings accounts. The accounts also won't have a minimum balance requirement even if the customer has had prior account issues. 

Lake Area United Way President Lou Martinez said the initiative has been under development for a few years.

Organizers say they'd like to help people open 1,000 new accounts and provide financial education services to 1,500 people within the next year.

Speaking to more than 30 people at the Lake Area United Way headquarters, Indiana State Treasurer Richard Mourdock said having access to banking services is tantamount to fulfilling "the American dream."

Angelisa Harris, community affairs officer for the Federal Deposit Insurance Corp. Chicago regional office, said the "Bank on" efforts nationwide are important to FDIC consumer engagement efforts. She said being "locked out of the financial mainstream" can negatively impact residents' ability to access funds to help them own a car, start a business or send their children to college.

About 21,700 households in Lake, Porter, LaPorte, Newton and Jasper counties are unbanked, according to data from the FDIC. Unbanked households are defined as those that don't have a checking or savings account. 

Mourdock said the problem with being unbanked or underbanked is people rely on "high-cost financial operations that charge transaction rates that are far in excess of what is right."

"We could sit back and do nothing and hope the situation changes" or we can do something," Mourdock said.

Mike Schrage, president and CEO of Merrillville-based Centier Bank, said the 1,000-account goal is achievable because he said Centier alone opened 350 eligible accounts for people in 2010. He expects about 400 of these accounts to open this year.

Peoples Bank Chairman and CEO David Bochnowski said the effort is an important part of the institution's mission to serve the community.

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