Lisa Servon on predatory check cashing services

Lisa Servon via Alex Morrell:

The prevailing wisdom from bankers and policy makers went like this: People who used alternative financial services — like check cashers and payday lenders — were making expensive and unwise decisions…

But Servon, a professor of city and regional planning at the University of Pennsylvania and a former dean at the New School, spent 20 years studying low-income communities, and to her, that picture didn’t add up…

“The implication of that… was these people were making poor decisions,” Servon recently told Business Insider. “I knew that the people I had worked with closely who don’t have very much money know where every penny goes. They budget things. They know where to get the best deals on things. And so it struck me that if they were using check cashers, there must be a good reason for that.”…

Servon recounts her journey in her new book, “The Unbanking of America: How the New Middle Class Survives,”…

Over and over, Servon heard and observed that check cashers often met customers’ needs better than banks did.

She discovered there were three main reasons people used these services instead of banks: cost, transparency, and service.

This is a great example of the value of how familiarity with target population can yield better research. Prior to this, I had always thought these types of services were overpriced relative to a traditional bank, but I was not a good judge of that because I never really need the services they provide, so I naturally discounted their value to those that do need them.