Financial times have been difficult (at best) over the past decade. From steady unemployment to a shaky investing outlook, people have been more worried about finances in the recent past than they have ever been before. Times have even been tough for providers of alternative financial services. With the DOJ using Operation Chokepoint to crack down on small dollar lending companies and check cashing facilities, the providers of alternative financial services have had to fight tooth and nail in order to assist the nearly 70 million people who are either underbanked or completely unbanked.

LA_at_dawnFor anyone who has been keeping tabs on things, the battle that non-bank financial service providers have had to go through, going all the way back to when the Comptroller of Currency set out on a mission to outright ban short term, small dollar loans from dispersing funds via big bank branches. While the office of the Comptroller obviously had their own agenda and job to do, with regards to taking a stance on the shady practices of SOME payday lenders, they certainly made life difficult for the legitimate short term lending companies too. Unlike what we’ve seen in recent years, with the rise of Operation Choke Point, it is easy to see that the past actions of the Comptroller’s office were not necessarily an attack on payday lenders, but rather was a step to prevent states from regulating national banks. Whether alternative financial service providers like what the Comptroller did or not, their policy was put in place to protect the interests of the entire national banking industry.

However, things could have been handled different with regards to thinking about the people who regularly take out payday loans or use other alternative financial services. Banks should actually do what they can to encourage small dollar lending, check cashing and other financial services that are regularly used by millions of people all across this land. The banks could do a lot of good, not just by encouraging these types of loans via third party lenders, but by directly offering these types of services to low and middle income customers who regularly make use of the services of both online and local alternative financial service companies.

There is a huge market out there for these types of financial services. Let’s take a look at this industry to better gauge just how huge this market is. According to information from the FDIC’s National Survey of Unbanked and Underbanked:

Families that bring in less than $30K every year account for over 70 percent of the underbanked households in this country.

With these stats in mind, it should be apparent to the powers that be that there is a desperate need that mainstream financial service providers simply cannot meet at the present time, and millions of families out there who depend on the money that they can only get through payday lenders and other alternative financial service companies. Until the national banking industry can step up to the plate and offer these types of services to the millions of people who need them the most, it is in the government’s best interest to stop persecuting small lending companies, but instead to start encouraging them to be able to provide the unbanked and underbanked people of this country with the financial services they so desperately need to get by from week to week.