Report: Older Chicagoans at Risk as Banks Innovate

Seniors in Chicago’s South Side at Highest Risk

FOR IMMEDIATE RELEASE: April 17, 2019

PRESS CONTACTS: Jenna Severson

CHICAGO, IL – A reportreleased today by Woodstock Institute entitled “Digitally Divided: Older Adult Banking Vulnerabilities in the Chicago Region” reveals neighborhoods at highest risk of being left out of mainstream financial services, and offers solutions for financial institutions and policymakers.

 “Financial institutions are rapidly shifting their services to online and mobile systems, but technological and regulatory changes pose a threat to someolder consumers who are less likely to adopt new technology,” said Woodstock Institute President Dory Rand. “Our recommendations encourage banks and other financial services providers to include, empower, and protect vulnerable consumers in our financial system, to bridge the digital divide, and to innovate in ways that help older adults manage their financial lives as they age.”

Obstacles faced by older adults include physical and cognitive impairments, lack of proximity to traditional financial services providers, financial stress, social and technological barriers, and vulnerability to fraud, financial abuse, and exploitation.

To address older adult banking challenges, the reportidentifies specific geographies in the Chicago seven-county region in which older adults are at highest risk. ‘High vulnerability’ areas are identified as census tracts with a proportion of older adults and older adult poverty rates that exceed the regional average, lower-than-average broadband internet access, and a lack of proximity to a bank branch. Of the 73 high-vulnerability census tracts identified in the report, 85 percent are in low- and moderate-income (LMI) census tracts, and 92 percent are in communities of color. The report also identifies an additional 68 tracts across Cook, DuPage, Will, Lake, Kane, Kendall, and McHenry Counties as ‘moderate-vulnerability’ areas.

Older adults on Chicago’s south side are at the highest risk in the region. Over half (44 of 73) the concentration of high-vulnerability tracts are in Englewood, West Englewood, Greater Grand Crossing, Roseland, Fuller Park, Douglas, and West Pullman. Other areas of high-vulnerability exist on the city’s west side in Austin, West Garfield Park, and East Garfield Park. East Garfield Park and Fuller Park are two of seven Chicago community areas that lack a bank branch according to Woodstock Institute’s 2018 Chicago Area Community Lending Fact Book. In suburban Cook County, high-vulnerability areas include south suburban Harvey, Blue Island, Robbins, Chicago Heights, and South Holland, and northwest Cook County near the Dunning community area. In the collar counties, high-vulnerability exists in Will County in and near Mokena, south of Crete in unincorporated Will County, in the southwest corner of rural Will County near Wilmington, in DuPage County in Carol Stream, in Kane County in Batavia, and in the northwest corner of Lake County. McHenry and Kendall Counties do not include areas of high-vulnerability, but do include areas of moderate-vulnerability.

“Our findings reinforce what we might expect in the ‘tale of two cities,’” noted report author and Woodstock Institute Research Director Lauren Nolan. “The areas most in need of age-friendly banking initiatives and policy reforms are largely the same areas that struggle to access traditional financial services and to recover from a history of racist policies and structural inequities in our financial system.”

The reportproposes solutions to improve the financial health and wellbeing of older adults. For financial institutions, the report recommends the following:

  • Consider the impact of bank branch location and closures on older adults.
  • Provide age-friendly banking products and services, such as view-only accounts, accounts that meet BankOn standards such as no overdraft fees, and accessibility features.
  • Train staff on older adult banking needs and exploitation detection.
  • Report suspicious activities to more authorities, such as the Consumer Financial Protection Bureau.
  • Equip older adults with tools to navigate technology and identify fraud.
  • Provide training and resources to families that include or care for older adults.
  • Partner with community-based organizations to launch age-friendly banking initiatives.

For policymakers, the report recommends the following:

  • Strengthen the Community Reinvestment Act (CRA).
  • Oppose regulatory “sandbox” schemes that permit companies to experiment on consumers without licensure or oversight.
  • Require financial technology companies or “fintechs” seeking a federal charter to have and implement robust financial inclusion plans.

The presence of physical bank branches in neighborhoods is particularly important for older adults, who are increasingly vulnerable to losing access to traditional financial services when banks close brick-and mortar locations—a trend the report notes is accelerating.

“Banks should be sensitive to older adults because we are not comfortable with this modern technology. It is very important to us to have a physical contact with the banks,” said Northwest Side Housing older adult leader Rev. Gwen Byrd.

The report is released at a time when federal regulators are considering significant changes to the Community Reinvestment Act (CRA), a civil rights law created to address redlining, which intentionally excluded homeownership opportunities in non-White communities. Proposed modernizations to the CRA are needed to address market changes in the financial sector, such as the consolidation and the digitization of banks. Advocates from housing, civil rights, and financial justice groups warn that changes to CRA should strengthen, not undermine, the original purpose of the law that holds banks accountable to local community needs.

Funding for the report was generously provided by The Retirement Research Foundation.