Nieman Foundation at Harvard
Editor’s note: Our sister publication Nieman Reports is out with their new issue — go check it out. I write a column for each issue of the print edition; here’s my latest.
Something sometimes forgotten in the endless handwringing over the decline in trust in the media is that we’re hardly alone. Over the past decade, Americans’ trust in many of the country’s most prominent institutions has been shrinking.
Trust in organized religion? Down. Trust in public schools? Down. Trust in the presidency? Down even before the current occupant. Trust in Congress? They barely make numbers low enough to show how far down.
In 2001, a few months before 9/11, Gallup surveyed how people felt about 14 different major American institutions. On average, each was trusted by 43 percent of Americans. By 2016, that had slid to 32 percent. It’s not hard to connect that growing distrust to Donald Trump’s electoral success, or to some people’s seemingly increased capacity to believe factually untrue things. If an institution — the media, political leaders, a government agency — tries to dissuade you of an afactual belief, it’s unlikely to be effective if you don’t consider that institution’s standing to make a truth claim at least a little higher than some comment-section rando’s.
Lately I’ve been thinking about the correlations between the media’s audience problems and those of another not-so-beloved national institution: banks. As of last year, just 27 percent of Americans said they had confidence in the nation’s banks, down by half from 53 percent in 2004. And just as some share of Americans have checked out of the traditional journalism ecosystem — happy to dine on partisan clickbait, Facebook fake news, or the airy meringue of 2017-vintage Internet #content — many have dropped out of the banking system.
The term of art in that industry is “the unbanked” — usually defined as people who don’t have a traditional checking or savings account. Instead, they rely on some assemblage of informal service providers — check-cashing centers, payday lenders, neighborhood loan sharks, prepaid debit cards, pawnshops — to do some of the work that most Americans trust a big bank or a local credit union to do. (The “underbanked” have a formal bank account, but also use some of these informal services.) Estimates vary, but an FDIC report from 2015 found that 9 million American households were unbanked and another 24.5 million were underbanked. They’re more likely to be low-income and low-education.
Just as many journalists remain puzzled by the media diets of their aunts and uncles back home, some in the banking industry wonder why anyone would prefer to use what they see as obviously inferior services. If you don’t have a bank account, traditional American goals like saving up for a house or building a credit history become almost impossible. Luckily, there’s been some good research on why the unbanked do what they do. Here are a few of the reasons that have surfaced:
— Many think they don’t need a regular bank and that banks don’t want them anyway. The most common reason cited in one study for not having a bank account was that they felt they didn’t have enough money to bother. If someone doesn’t see any potential reward to engaging with the industry, it’s hard to convince them otherwise. Particularly if they believe that the other side of the relationship isn’t interested either. An FDIC study found that 55.8 percent of the unbanked surveyed said the Wells Fargos and JPMorgan Chases of the world are “not at all interested” in serving people like them.
— Many can’t afford regular banks. They’ve been burned by banks’ increasing hunger for fees and penalties, much of which focuses on people who can least afford it. A Pew study found that 18 percent of consumers had paid an overdraft fee in the previous year, and about a third of all those who’ve overdrafted closed their account as a result. In 2009, 76 percent of banks offered a free checking account; by 2016, that number had dropped to 38 percent. The average ATM fee increased 131 percent between 1998 and 2016; over the same span, the average overdraft fee moved from $21.57 to $33.04. Big banks have chosen to extract more money from those at the low end of their customer base, and many walk away rather than face a barrage of fees.
— The unbanked have customer service needs that aren’t well met by traditional banks. Some of this is practical: For poor Americans, check-cashing centers are in their neighborhood; the big retail banks are often farther away. Thirty years ago, banks were typically locally owned and based; today, five giant banking corporations control nearly half of the industry. That increased distance makes it both easier and more accurate to think the banks’ interests diverge from your own.
But part of it is also that people want more from a financial relationship than a statement whose numbers add up correctly each month. Lisa Servon, a professor of urban policy at the New School, spent time actually working at check-cashing centers in New York and California to better understand why their customers were loyal to them. While cost was an overriding factor, she also found that personal relationships and a feeling of connection with the centers’ staff was critical for many. Tellers remembered customers’ names and built up relationships that weren’t institutional; as one regular put it, “We can be family. We know all of them.”
One lesson I learned early on in news is that what journalists value and what their audiences value are often frustratingly misaligned. We see high-quality news outlets and low-quality ones and wonder why anyone would choose the latter over the former — just as a VP at Bank of America might wonder why anyone would use some place called EZChekNow instead of his tastefully appointed branch a couple strip malls over. But the decisions of customers aren’t driven solely by perceptions of “quality”; they’re also derived from more prosaic factors like customer service, cost, feelings of community and personal connection, and a sense that both sides of the transaction have similar interests at heart. In an environment where trust is no longer the default — where reading your local daily in the morning and watching a news broadcast at night have moved from standard to niche behavior — doing great journalistic work isn’t enough.
