The recent news about JP Morgan Chase and the $2 Billion dollar market loss may have scared The White House, as one of the nation’s stronger banks was the originators of this loss. The White House may want to consider another analysis of the $2 Billion dollars lost in market trading. In the new normal, one of three Americans are considered underbanked which is defined by individuals being excluded from the mainstream banking and may use check cashing services as banking alternative. JP Morgan Chase and other commercial banks are profit driven, and focus on profits leave no room for the underbanked in the commercial banking world. The banking industry does not look at a long-term strategy when the topic is the underbanked. The financial health of the consumer is a direct impact to the real economy. The benefit of bringing the underbanked into the mainstream banking umbrella to promote a vibrant, healthy financial consumer base goes to the economic growth of the real economy. The $2 billion dollar investment in underbanked would have been an investment with return on investment forthcoming in the future.
In the terms of the underbanked, JP Morgan could have taken a $2 Billion dollar investment in the underbanked with high impact in the lives of many people. Consider that one-year cost of bringing aboard the underbanked into mainstream banking fray. The annual cost of an account is around $200 per account annually to the banking institution. Consider additional expense $800 annually to provide financial literacy courses as a program to assist the underbanked to be successful in the mainstream banking world. The total annual expense is $1000 per year to bring the underbanked onboard the banking institution as this equation and calculation is still hypothetical. The following equation is the number of people impacted with a $ 2 Billion dollar investment:
$2,000,000,000 dollar investment /$1000 one year expense= 1,000,000 accounts/people
One million underbanked customers would have an opportunity to enter the mainstream banking arena with a $2 Billion dollar investment. Two trading days did cost JP Morgan around $2 Billion dollars. Imagine the future return on investment for the same dollar amount to bring mainstream banking services to one million people. The return on the investment would not be immediate, but the long-term impact to the bank, community, and the real economy would be nothing but a positive in the restoration of financial health and trust to the consumer.