Postal Banking: “Banking the Unbanked”

In an effort to address financial exclusion and promote economic empowerment, Baradaran makes the case to leverage the reliability of the United States Postal Service to provide banking to underserved communities across the nation.  

Since the early 1980’s, over 70% of small community banks merged, were purchased by larger institutions and ultimately closed their doors. This has left banking deserts in the wake of these closures and more than 40 million Americans without a bank account. The "unbanked" today are primarily Black, Brown, rural and residents of under-resourced communities. They face multiple, time consuming hurdles in order to pay simple bills, and are said to pay 10% of their income on costly payday-lender and check cashing transaction fees– (which has become a $90 billion dollar industry today).   

Enter Postal Banking

Baradaran’s research underscores the USPS’s unique position to provide much-needed financial services for the large population of un and underbanked Americans: First, the Post Office can offer credit at lower rates than fringe lenders by taking advantage of economies of scale as well as its position in the federal bureaucracy. Second, with over 33,000 branches across the country, it already has locations  in many low-income neighborhoods that have been long deserted by commercial banks. And third, people at every level of society, including the unbanked, have a level of familiarity and comfort with the Post Office that they do not have with more formal banking institutions. 

Thanks to a partnership with Vermont State Bank (VSB), an Illinois bank committed to empower and serve under-resourced communities, the United States Postal Service (USPS) and Office of the Governor, JB Pritzker, Illinois will launch its Postal Banking pilot program this summer.