Progressive lawmakers including U.S. Sen. Bernie Sanders and U.S. Rep. Alexandria Ocasio-Cortez want Americans to be able to visit their local post office for their banking needs.
Sanders, an independent from Vermont, and Ocasio-Cortez, a New York Democrat, see “postal banking” as a potential solution for the estimated 32.6 million U.S. households that are “unbanked” or “underbanked,” meaning they don’t have a checking or savings account and often turn to services like check cashing or payday loans that can harm them financially in the long term.
Proponents say post offices could replace banks in areas where bank branches have closed. In the wake of the financial crisis, thousands of bank locations shuttered as financial institutions sought to cut costs. As a result, some 3.74 million people live in so-called “banking deserts” and have limited access to financial services.
But new research shows that only a small segment of the population lives closer to a post office than they do a bank, limiting the benefits postal banking could bring.
Only about 20% of counties nationwide have more post office locations than they do bank branches, according to a recent study from Ken Tumin, founder of the banking website DepositAccounts, a subsidiary of LendingTree TREE, +1.47% And these counties are home to just 7.2 million people, roughly 7% of the country’s population.
As for the number of counties that have a post office but no bank, the number is even smaller. This is true of roughly 1% of counties across the country — and a mere 207,000 people, less than 1% of the nation’s population, live in them.
At a ZIP code level, roughly a third of ZIP codes are home to at least one post office but no bank or credit union, while 38% of ZIP codes have a greater number of bank and credit union locations than post offices. Comparatively, 16% of ZIP codes have neither post offices nor banks, and 13% have an equal number of locations for the two.
“Post offices are a less convenient option for most Americans,” Tumin wrote. “However, this fact does not mean the financial and banking needs of a substantial number of adults are well-served.”
Tumin’s study was based on a geographical analysis using data from the Federal Deposit Insurance Corp., the National Credit Union Administration and the U.S. Postal Services. Sanders and the Campaign for Postal Banking did not respond immediately to requests for comment.
There are more than 31,000 U.S. post offices across the country — however, due to missing ZIP code or county information, only 26,516 were able to be mapped for the analysis. Meanwhile, there are roughly 88,500 bank branches and 22,000 credit union branches nationwide.
While the U.S. Postal Service’s geographic footprint may seem limited, it has far more locations than any retailer, such as Walmart and Starbucks.
Despite the limitations of this analysis, the findings correspond with other research regarding the areas nationwide that could benefit from postal banking. A 2017 study from the Mapping Financial Opportunity project at the University of Kansas found that less-populated rural counties would benefit the most because they have more post offices than banks.
The U.S. Postal Service is viewed as a good conduit for banking services in part because it already offers some financial services, including money orders and cashing of Treasury checks. Plus, for a large chunk of the 20th century, the Postal Service did offer savings accounts and other banking services, and many other countries currently have postal banking services in place, including Austria, Italy, Brazil and New Zealand.
Moreover, while the U.S. Postal Service’s geographic footprint may seem limited, it has far more locations than any retailer, such as Walmart WMT, +0.18% and Starbucks SBUX, +2.79% according to the Campaign for Postal Banking. Consequently, post offices could serve as a better stop-gap for banking needs for people who otherwise turn to payday lenders currently, including the 6.5% of Americans who are “unbanked,” according to the FDIC.
However, critics argue that government-sponsored financial services offered through postal branches could weaken credit standards. Moreover, with more and more people having access to a smartphone or the internet these days, online banking is more readily available to a wider swath of the population, leading some to question the need for postal banking as a solution.