Improving Financial Inclusion through Communal Financial Orientation: How Financial Service Providers Can Better Engage Consumers in Banking Deserts

Banking deserts, vulnerable communities that lack access to mainstream banks, represent a serious societal problem. Mainstream banks successfully entering banking deserts can help to assuage this problem. Drawing from research on the psychological consequences of poverty, we propose that mainstream banks can more successfully operate in banking deserts by increasing consumers' perception of communal financial orientation as a bank benefit (i.e., consumers' perception that engaging with the bank is beneficial for their community's well-being). Two field studies, comparing customers of a credit union who live in a banking desert and those who do not, show that the perception of communal financial orientation as a bank benefit increases banking-desert consumers' beliefs that engaging with the credit union is beneficial and increases their likelihood of patronizing and recommending it; consumers living outside banking deserts do not display these effects. These findings provide novel insights into psychological mechanisms distinctly associated with banking-desert consumers and establish the importance of communal financial orientation. This is a win-win proposal for under-served communities and financial service providers because it helps both improve financial inclusion and increase the viability of serving banking deserts.