For many Americans, a bank account is a basic financial tool – used for everything from paying bills to saving for the future. But for millions of Latinos across the U.S., opening a bank account isn’t as simple as walking into the nearest branch. In many communities, mainstream banking options are scarce, financial jargon is intimidating, and trust in institutions remains low.
As climate disasters intensify, the stakes are even higher. Without access to traditional banking, many families struggle to recover from job losses, property damage, and unexpected emergencies.
According to the latest data, about 10% of Latinos are considered “unbanked,” meaning they lack a checking or savings account and rely instead on alternative, often costly, financial services that make it harder to build financial stability.
UnidosUS, a Latino advocacy organization, is working to change that by bridging the gap between financial institutions and the Latino community. Through financial education, policy advocacy, and community partnerships, UnidosUS helps Latinos gain access to banking services, build credit, and protect their financial futures.
In an interview with Yale Climate Connections, Mauricio Garcia of UnidosUS shed light on why so many Latinos remain unbanked, how this financial exclusion makes them particularly vulnerable to climate disasters, and what can be done to build trust in banking institutions.
This interview was edited for clarity and brevity.
Yale Climate Connections: What are some of the reasons people might be unbanked?
Mauricio Garcia: There are a variety of reasons. In some regions and communities that have heavy concentrations of Latinos, particularly working poor or middle-income Latinos, there isn’t the prevalence of mainstream banking [options] in general. So oftentimes it’s the lack of options in a respective neighborhood.
In some cases, the family is new to the country. If they’ve only been here a few years, there might be fears associated with putting [their] money into an institution that [they’re] not familiar with. Sometimes, there are language barriers.
And then oftentimes, it’s very complicated to understand how to choose Bank One from Bank Two. And this is where financial education plays a significant role in all of this. What are all these terms that are being used? How much do I have to pay? Is there a minimum in terms of how much money I need to have? So there’s this navigation that needs to happen that oftentimes is complex.
And a big piece is trust. Latino communities and Latino families don’t know these institutions. They might see commercials on TV, but they don’t have that trust.
All those coming together and coalescing is what really has fostered folks being unbanked.
And we talk about folks being unbanked but [just] as important [are] folks who are underbanked, which is folks who may be using financial service providers and financial products, but they’re not the ones that those folks should be using because of high fees, or they might be predatory services. And there’s a good number of Latinos and other folks, unfortunately, who are tapping into those services when, in fact, they should probably be doing something that is not costing them money for managing their own finances.
YCC: How is your organization working to reach unbanked Latinos?
Garcia: UnidosUs is committed to growing the wealth, fostering the health, and building the power of the Latino community, particularly those who have multiple barriers to opportunity. And we do so primarily through efforts around policy and advocacy. So we are working closely with folks in Congress. We’re working closely with other partners to make sure that there are policies in place that break down some of those barriers to opportunity.
We also do so programmatically. We design initiatives that are implemented at the local level in partnership with [our] 300-plus community-based affiliates. Because we’re a national entity, we don’t work locally. We rely on – and partner and collaborate with – those affiliates to share resources with Latino community members.
Every Latino community is a little bit different, so we try to tailor those services. And that’s why we lean [on] and partner with our affiliates. They serve as that fountain of information, whether it’s education, workforce job training, information about food, nutrition, security, signing up for SNAP or Medicaid, or things of that nature. And that also includes providing education around financial best practices.
We do financial coaching across the country. We have a financial empowerment network that’s really powered by our community-based partners. But ultimately, the information that we provide to the folks on the ground is vetted by us. We do a significant amount of research so we know what are good products, what are not good products, and so we rely on that community partnership to really make sure that our community understands what’s out there, what to be careful of, and what sort of things you can do to plan a little bit better even if you feel as if you can’t save a dollar a day.
YCC: With so much predatory lending and the lack of trust in financial institutions, how do you go about helping people overcome those trust barriers?
Garcia: There’s definitely a personal touch to this, and I keep going back to our partners on the ground. Whether they’re a service provider like a nonprofit that provides job training, faith-based institutions, the local school, and depending on the community, local elected officials – they have a footprint in the community – over the years they’ve become that trusted messenger, and people will believe them. And that’s where the source of information is critical and why it’s important for national networks like UnidosUS to have that presence on the ground. That’s where we need to spend most of our time in terms of the education piece on why it is important to be banked, why it is important to switch where you’re banking if it’s being more extractive than helping you. A commitment to having that education on the ground and resourcing it effectively is critical.
There are a lot of nonprofit organizations that are doing work in communities to lift up and provide the necessary support, in some cases emergency support, but that entire sector is under-resourced overall for the amount of need that is out there. And that’s where organizations like UnidosUS and others like it are important so that we can start to help provide other support beyond just dollars to help those organizations do the work that they need to do every day.
Our goal is to make sure that the messaging – from why it’s important to be banked or how to tap into emergency response and emergency funds in response to a climate event or climate disaster – is a collective effort. It needs to be a full event where everyone is involved and to raise awareness on how to go about that. And it can’t be all our community-based partners because they’re strapped when it comes to resources and capacity.
YCC: Why does being unbanked make people particularly vulnerable during and after climate disasters?
Garcia: This goes into folks needing to have some sort of rainy-day fund – the ability to withstand and be resilient to these [crises]. As we see now in Los Angeles, a lot of folks do not have homeowners’ insurance or apartment insurance. And part of that is because of their inability to have a rainy-day fund: They don’t have any savings or aren’t able to make ends meet. And those are extreme scenarios, but they’re not that extreme anymore – they’re becoming more frequent.
If you are barely able to make ends meet, you may be a cash earner – a day laborer – where you’re relying on getting paid that day, it’s hard to think about “Oh, I’m going to have 40 hours of work next week.” You don’t know that. There’s that uncertainty around labor.
There’s labor loss because of increased heat, or because there’s a wildfire, or because there’s flooding, and you can’t go to work. In Los Angeles, one of our affiliates supports small businesses, specifically Ma and Pa food truck vendors, folks who are day laborers, folks who are working outside. All those folks – even if they had some savings – no longer have work right now. Either their homes are no longer there, and/or they’re not able to have a job because of the climate impact.
Read: Climate change made deadly Los Angeles wildfires 35% more likely
But on an everyday basis, when you think about all the different responsibilities and costs, and you think about inflation right now, it’s often hard to think about, “OK, how do I put my money aside for not only a goal but for a disaster?” And most families, whether you’re Latino or not, are having a hard time being able to build that reservoir of resources to be able to address some of these new challenges that are, in many ways, disproportionately impacting the Latino community.
So even before we can get to those things, how can we start saving when the system is not built for folks to be able to do that? There’s all this education [needed], there are all sorts of pitfalls like predatory banking services, [which] still exist in larger percentages in Black and Brown communities, including the Latino community. And so whatever we can do to be able to mitigate some of that cumulative loss is important. And this is not a politicized thing, this is the reality we’re living in.
YCC: Are there also challenges in accessing relief aid that comes with being unbanked?
Garcia: There are. Fortunately, in many cases, when relief aid is available, or response services are available, they often go through a trusted messenger like community-based organizations that have a history in respective neighborhoods or communities, local elected officials, and anchor institutions like higher education, high schools, and school districts. And so that eventually makes its way to many communities and many families.
But there are other opportunities to seek out aid through banking institutions and through insurance, which many people don’t have. And so it does create a barrier there, particularly around messaging. And one of the reasons, among many, why we think folks need to be banked is because it is a source of information for a variety of different [things], whether it’s your checking account or how to tap into resources from FEMA.
YCC: Why is this an especially important issue as the climate changes?
Garcia: Climate change is exacerbating the things we’ve already known in terms of the barriers to financial mobility, the barriers to being banked, the barriers to building generational wealth, and more specifically it’s exacerbating it because it’s so unknown.
Yes, we’ve known that in California, wildfires have been more prevalent over the last five or 10 years. But did we know that we were going to have a situation where one of the most populous areas of the country – of the world – would be in the state that it is now? And knowing that as we speak, homeowners’ insurance rates for folks near water, [or] who are [in areas] more prone to wildfires or flooding, that insurance is skyrocketing, or in some cases going away outright? And who lives in those neighborhoods? Latinos, working class folks.
Latinos are disproportionately impacted by this climate crisis. And it is a crisis, and it’s going to continue to be a crisis unless we invest in efforts to really mitigate it. And so the more we can do collectively to work across communities, organizations, and party lines, the better we will be able to address these existential threats that are here and that will continue to grow.
[We need] more resources, more partnership, and frankly, more awareness. And that means putting conversations around financial inclusion or climate in ways that everyday people can understand and really apply in their daily lives. And so that’s why having financial empowerment is so important – to know and prepare for these events that are coming fast and furious every day.
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