The financial sector of the United States economy has had a bad go of it in the last few years. Not only have big banks been pinned for single-handedly bringing about the worst economic downturn since the Great Depression, it also seems like every other day someone is getting slapped with a huge fine from the Justice Department. In addition, there is growing evidence that these institutions have actively worked to undermine local tax revenues by engaging in fraudulent credit swaps with numerous cities and municipalities across the country, a concept deserving a separate piece altogether.

There is one big banking problem not many are talking about, and it is every bit as detrimental to our economic health. According to a survey administered by the Federal Deposit Insurance Corporation, 7.7 percent of American households are unbanked, meaning they have absolutely no access to traditional financial services such as 
checking or savings accounts. Also, about 20 percent of households are underbanked, meaning they are still forced to utilize less reliable services, such as payday loan lenders and pawn shops. While those numbers alone are pretty rough, the picture gets more bleak when looking at Alabama. In the Heart of Dixie, 9.2 percent of households are unbanked, while a staggering 26.4 
percent, over a fourth of all households, are underbanked.

Now, why might this be the case? For starters, lots of people in Alabama are poor – very poor. Not having extra money on hand can make opening up a bank account difficult, especially as the once-ubiquitous “free checking account” continues to fade out. Monthly fees and minimum deposits also contribute to the problem. Many of the other factors are more intangible. Low-income families are more likely to have bad experiences with banks, misunderstand how they work or be dependent on other modes of financial exchange which, while often more convenient, are far more 
dangerous, such as the aforementioned payday loan lenders. Another possibility that seems more relevant in Alabama is that many families live in rural areas, where banks have little incentive to expand.

All of this is a massive dilemma because a credit score – preferably a good credit score – is essential to entering the financial mainstream in America. Everything, from buying a house to getting a student loan, depends on credit score. Families without them are essentially barred from these activities, which keeps these families from improving their 
economic position.

So how can this unbanked or underbanked problem be addressed? The University of Alabama has an easy option here, should it choose to take it. Several credit unions across the state are involved in a national “Bank On” campaign that strives to decrease the number of families without access to financial services. The University could agree to take a portion of its hefty endowment and invest it – note here: “investing” and “donating” are two very different things – in these credit unions. The George Washington University in Washington, D.C. is considering a very similar approach with community development banks, so there is a precedent for this move. In addition, the University could place a greater emphasis on teaching financial literacy to its students while using its vast resources to do the same for unbanked and underbanked residents of Tuscaloosa.

No, this is not a particularly alluring issue. But the implications of not having access to the most powerful financial sector in the world are wide-ranging and intergenerational. This University can make a great step forward in eliminating this issue and make a better name for itself at the same time. It’s time to bank on progress.

Chisolm Allenlundy is a junior studying economics and philosophy. His 
column runs weekly.