“The Real Reason the Poor Go Without Bank Accounts”: relationships

A public policy professor worked four months at a check cashing business and found check cashing services offer several features that banks do not:

At commercial banks, the account itself often maintains the relationship between the customer and the institution. I might not be satisfied with my bank, but it’s an enormous inconvenience to switch everything over to a new one, and there is no guarantee any other bank will be more efficient or better…
The glue at RiteCheck is the customer/teller relationship. I interviewed 50 RiteCheck customers after my stint as a teller and, when I asked them why they brought their business to RiteCheck instead of the major well-known bank three blocks away, they often told me stories about the things the RiteCheck tellers did for them. Nina, who has lived most of her life in Mott Haven, told us that her mother had been very ill and that the RiteCheck staff had called to ask about her. “So we can be family,” Nina said. “We know all of them.”

Being a regular at the check casher also brings more tangible benefits. Marta, another regular, came to my window one afternoon with a government issued disability check to cash. When I input the number from her RiteCheck keytag into my computer, the screen indicated she owed RiteCheck $20 from every check she cashed. I didn’t know what to do, so I turned to Cristina for advice. I learned that Marta had cashed a bad check awhile back, and that RiteCheck had worked out an arrangement in which she could pay RiteCheck back in installments…

Many factors—cost, transparency, convenience—go into the choice consumers make between a bank and a check casher.  Atmosphere and the attitudes of the staff are only one component, but this piece of the puzzle may be more important than we thought. Like the famous TV song goes, “You want to go where everyone knows your name.” If policy efforts to move the unbanked to banks are to be successful in the long run, banks need to remember they are a service industry involved in one of society’s most important and basic relationships.

It sounds like the check cashers serve as a kind of community institution that customers can count on for social support as well as ongoing relationships. It isn’t just about the ability to access money; it also includes the flexibility to have give and take, whether that means helping someone get by when money is tight or celebrating big moments (like births) together. Many large corporations don’t offer this kind of personalization, even as they might offer cheaper prices or certain goods. And what incentive do banks have to lend money with people with lower incomes? That is not where the big money is to be made.

At the same time, it would be interesting to see an attempt to quantify just how much this customer service is worth. Does this apply to other industries as well? For example, there has been a lot of talk recently about the surge of dollar stores who offer goods cheaper than Walmart. Why might relationships matter more with financial institutions than dollar stores or fast food restaurants?

Measuring colleges by their service to community and country

Many publications want to get into the college rankings business and Washington Monthly released their own take today. The difference? They emphasize how the college gives back to society:

The Monthly’s list aims to be a corrective to the annual ranking of colleges published by U.S. News World & Report–the industry-standard roster that typically leads with well-endowed Ivy League schools that turn away the vast majority of applicants.

Instead, the Monthly ranks schools using three main categories: how many low-income students the college enrolls, how much community and national service a given college’s students engage in, and the volume of groundbreaking research the university produces (in part measured by how many undergraduates go on to get PhDs). To paraphrase the long-ago dictum of President John F. Kennedy, the Monthly is seeking, in essence, to ask not so much what colleges can to for themselves as what they can be doing for their country.

By that measure, only one Ivy cracked the top 10–Harvard. The University of California system dominated, with six of California state schools among the top 30 national universities. Texas A&M, which is ranked 63rd by U.S. News, shot into the top 20 in part because of how many of its students participate in ROTC. Meanwhile, Washington University in St. Louis plunged in these rankings to 112 from U.S. News’ 13, because only 6 percent of its student body qualifies for federal Pell grants, an indication that Washington’s students come almost entirely from upper- and middle-class backgrounds.

The U.S. News & World Report “relies on crude and easily manipulated measures of wealth, exclusivity, and prestige for its rankings,” Washington Monthly editor Paul Glastris wrote. The U.S. News’ rankings take into account freshmen retention rate, admissions’ selectivity, high school counselors’ opinions of the school, faculty salary, per-pupil spending and the rate of alumni giving, among other things.

While the editor suggests these new rankings are not as influenced by status and wealth, I wonder if the measures really get away from these entirely. It takes resources to enroll low-income students, provide resources ground-breaking research, and perhaps extra time for students to be able to be engaged in community and national service. On the other hand, colleges make decisions about how to spend their money and could choose to put their resources into these particular areas.

I’m sure there will be questions about methodology: how did they measure impactful research? How much should ROTC count for and how did they measure community engagement?

New rankings also give more schools an opportunity to claim that they are at the top. For example, Northwestern College in Iowa now trumpets on their main page that “Washington Monthly ranks NWC third in the nation.” Read past the headline and you find that it is third within baccalaureate colleges. On the other side, will schools like Washington University in St. Louis even acknowledge these new rankings since they don’t look so good?

Do NBA players really make a difference in their community?

In the course of watching the NBA playoffs, I’ve seen a lot of commercials about how NBA stars are active in their communities. While this might be good PR, do we know anything about whether these efforts have any effect? Perhaps the NBA doesn’t care as long as they portray the image that they desire…but I suspect many of these occasional forays into the neighborhood are just that.

I suppose people could cite particular athletes that are active in the community. They do exist. But on the whole, do these professional sports leagues really care about structural inequalities and the average citizen’s daily fate? Perhaps a more foundational question is to even ask whether they should even as the commercials try to suggest that they do.