The ABA Foundation today released a new whitepaper entitled “Strategies to Expand Financial Services Access for Individuals Involved in the Criminal Justice System” that explores common barriers justice system-involved individuals face when trying to gain entry to the financial system following the completion of their sentence. By profiling existing bank initiatives, the report also outlines potential strategies banks can use to expand financial services access to this often unbanked and underserved population and play a supporting role in the reentry process.
The whitepaper cites five primary barriers to financial access for the millions of justice system-involved individuals in the U.S. They include a lack of valid identification or permanent address, prior problems managing a bank account, misperceptions that a conviction record will disqualify someone from opening an account, levies on bank accounts or court garnishment orders because of past-due debt and high levels of fear or anxiety around banking services.
“As an industry committed to financial inclusion, we need to understand and address the obstacles preventing justice-involved Americans from accessing the financial services they need,” said Corey Carlisle, executive director, ABA Foundation. “This new whitepaper examines those barriers and identifies several bank initiatives that could help reduce them. We hope these real-world case studies inspire other financial institutions to consider how they can assist justice-involved individuals within their own communities.”
For people on work release, under supervision or rejoining the workforce after completing their sentence, the ability to cash a check without the high fees associated with non-bank services is incredibly important. One type of depository bank account that can be useful for justice-involved populations are Bank On-certified accounts, which offer low costs, no overdraft fees, robust transaction capabilities such as a debit card and online bill pay. The report highlights how the City of Lansing’s Office of Financial Empowerment in Michigan has partnered with several financial institutions to offer Bank On-certified accounts to those returning to society after incarceration. With the number of Bank On-certified accounts offered in the U.S. nearly tripling over the last year, the program holds potential beyond Michigan. Consumers can now find a Bank On account offered in nearly half of all bank branches nationwide, according to the Cities for Financial Empowerment Fund, which created the Bank On National Account Standards.
Another option to address this issue is for banks to create partnerships with local or state department of corrections to allow certain justice-involved people to cash certain kinds of checks. For example, Bank of Hawaii provides savings accounts and basic check cashing for participants in the Department of Public Safety Laumaka Work Furlough Program, a work-release program for inmates at the Oahu and Maui Community Correctional Centers. This limited access to the banking system can open the door to expanded access in the future and pave the way for additional economic opportunities.
Banks may also want to consider factoring “inclusive design” into their products and services by modifying restrictions that may result in unintended denials of service for justice-involved individuals, according to the report. That might mean waiving consideration of past account mismanagement or expanding flexibility around identification by allowing prison documents to meet those requirements.
Limited employment opportunities for those with criminal records can also act as a barrier to successful reentry. To help address this issue, JPMorgan Chase launched its Second Chance initiative that commits to giving qualified applicants with criminal backgrounds equal consideration as any other applicant, when their record has no bearing on a job requirement.
Additionally, banks may consider hosting financial education classes or workshops, which can be incredibly beneficial as a part of the reentry process. The whitepaper highlights additional programs at banks of all sizes that have been successful in helping justice-involved individuals build financial autonomy and management capability.