PNC Gets Certification for Account Aimed at the Underbanked

PNC Financial Services Group Inc. won certification from the Cities for Financial Empowerment Fund for a second bank account that limits fees, to help consumers facing financial pressures worsened by the pandemic maintain their access to banking services.

The checking account, which has no charges for overdrafts or insufficient funds, costs $5 a month, a company spokesperson said. The CFE Fund, a non-profit that seeks to improve financial stability of low and moderate income households, validated the account under its Bank On initiative, which works to ensure that everyone has access to affordable transactional bank accounts, the spokesperson said.

PNC Gets Certification for Account Aimed at the Underbanked

Havoc wrought by the pandemic threatens to push more lower-income families to the fringes of the financial system. Those who are underbanked typically don’t have enough cash to start an account or get loans from banks, and are especially vulnerable because they rely on cash as many merchants shift to digital transactions. The problem also intensifies the nation’s wealth gap, which disproportionately affects minority groups.

The certification makes PNC the only lender with two accounts certified by the CFE Fund’s Bank On movement and comes as the lender is working to help customers who are struggling to pay loans or fees stay in the banking system.

“We have to charge them off -- for accounting you have to do that,” PNC Chief Executive Officer Bill Demchak said of customers who miss payments. But they could be assigned such “a safety product -- a no-overdraft product -- basic banking,” he said in an interview.

One in four U.S. adults is considered unbanked or underbanked in the U.S., according to the nonprofit Financial Health Network, which says those consumers pay almost $200 billion a year in fees and interest on financial products.

Creating Wealth

“Practically we do money, we create wealth, we can help people own a home, we can help people manage credit, we can bring people into the financial system,” Demchak said. “There’s actually a lot of things we can do that can impact lives.”

PNC’s charges related to consumer overdrafts declined to $273 million last year from $412 million in 2019, according to regulatory filings.

When it comes to using algorithms to make credit decisions, banks have to “go old school and continually monitor” to avoid bias, Demchak said. The issue has come under scrutiny as banks and other lenders increasingly rely on machines to reduce costs and boost volume.

“Even if you designed it on the first day to be as neutral as you make it, through time, every day it changes, there’s the risk it leads to disparate impact,” the CEO said.

PNC agreed to buy Banco Bilbao Vizcaya Argentaria SA’s banking operations in the U.S. last year, vaulting it past rivals to become the country’s largest regional bank. Shares of PNC have climbed 18% this year.

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