How Low- and Moderate-Income Individuals Interact with Institutions to Access Financial Services

This section discusses findings from a content analysis of the conversations and journey maps that were part of the 12 financial well-being roundtables held by the St. Louis Fed throughout the Eighth District in 2025.Headquartered in St. Louis, the Fed’s Eighth District covers all of Arkansas, most of Missouri, and parts of Illinois, Indiana, Kentucky, Mississippi and Tennessee. See Appendix B for a description of the qualitative methodology, Appendix C for facilitation guide questions and Appendix D for journey map prompts.

The content analysis identified five themes: individual backgrounds, traditional financial institutions, nontraditional financial institutions, resource providers and community approaches to addressing access. Together, the themes describe low- and moderate-income individuals’ access to and utilization of transaction accounts and credit in their communities. Low- and moderate-income individuals’ journey to accessing financial services is typically shaped by sociodemographic characteristics and their experiences navigating the advantages and disadvantages of interacting with institutions. Participants voiced their recommendations for making the journey successful.

Findings from this qualitative analysis are described below, organized by the five themes identified above and key topics within them. Together, they represent the most frequently discussed items in the roundtables. This section also communicates participants’ perspectives on key areas in their own words.

Individual Backgrounds

Participants described that an individual’s background, characteristics and sentiments are foundational to financial well-being. Roundtable conversations paid particular attention to individuals’ lived experiences and the effects of external factors, like the financial system, on them. The individual consumer was at the center of participant conversations, and this theme was the second-most popular after community approaches.

Financial literacy and trust in banks are key to accessing bank accounts and credit.

Financial literacy was described as what an individual learns through both informal education—unstructured learning from family and friends in everyday life—and formal education—structured learning that follows a curriculum, like financial counseling or education webinars. Participants said that informal education early in life had the greatest effect on financial literacy.

“It comes down to what we have learned from our families. What are our money values? What are our attitudes toward money and banking, and that sort of thing?”

Individuals with high financial literacy are typically introduced to a traditional financial institution by family and use services from one later in life. Conversely, individuals with low financial literacy are more likely to use nontraditional financial intuitions—in part because they are unfamiliar with banks—and to struggle with debt.

Financial literacy was an important factor in how much an individual trusts traditional financial institutions. Participants said that individuals with low financial literacy or a negative experience with a bank, like an account closure or credit denial, had low trust in banks. Further, participants said that, just like for financial literacy, individuals may learn to have low trust in banks from their family and friends.

Individuals have negative feelings about accessing financial services.

Participants said that interactions with financial institutions tend to provoke negative emotions in low- and moderate-income individuals. The top emotions attributed to individuals were frustration, confusion, low confidence and feeling overwhelmed.

Individuals are frustrated by the slow speed of accessing or building their credit scores, having to miss work to make it to a traditional financial institution during business hours, and being denied credit, according to participants.

“Credit-building is not a quick journey. It takes time, and it is frustrating. Some people will stick it out and continue the journey. Others will get frustrated and try to go find that shortcut.”

Participants said individuals, especially those with low financial literacy, are often confused and overwhelmed by traditional financial institutions’ credit application processes. Such emotions are elicited by technical language and required documents.

“They might be overwhelmed with the kinds of information that are being requested of them, which could lead them to not even applying somewhere like a bank. Being overwhelmed with the process … could lead them to being frustrated.”

Individuals are not confident about how to approach or apply for credit from a bank. In time, however, individuals may become more confident as they learn about traditional financial institutions and credit, participants noted.

Traditional Financial Institutions

Participants defined traditional financial institutions as banks, credit unions and community development financial institutions. This theme describes the advantages, disadvantages and outcomes that low- and moderate-income individuals experience in their interactions with traditional financial institutions.

Low- and moderate-income individuals struggle with the requirements for and speed of accessing bank accounts and credit.

Documentation and language were the most-cited barriers to traditional financial institutions’ transaction accounts and credit. To access either, banks require that individuals submit identification, like a driver’s license, and other documents, like a business plan or tax returns. Individuals may not have these documents or know how to prepare them. Participants said that business loans are especially difficult because individuals often do not have a business plan. Individuals may find it difficult to understand technical language, which one participant called “jargon,” in application forms and other bank materials.

“I have 10 folks that come to me wanting capital for their small business; maybe one has the financial statements.”

Participants said opening a checking or savings account or applying for credit is time-consuming. The process can be slowed if an individual needs to take time to gather or prepare the required documents or understand technical language. The journey may be the most time-consuming for individuals who are denied credit and need to apply again or build their credit score to qualify for a loan.

“You may get a no, but why? Because your business plan isn’t well-thought-out or you have some discrepancies here that need to be shored up. It doesn’t mean it’s a no forever; it just may be a ‘not right now.’”

While relationships with banks can benefit customers, there are limits.

Participants discussed the need for low- and moderate-income individuals to build relationships with bankers. They said that bankers can help individuals meet their financial goals by answering questions, recommending products, and walking them through the process of opening an account or applying for credit. Several participants added that bankers may check in with individuals, especially small-business owners, on a regular basis to provide ongoing support and build rapport.

Participants described that some individuals, regardless of their income level, have no relationship with a banker and use only online financial services. While those are convenient, one participant said that it makes it “hard for [bankers] to coach you and steer you in the right direction,” and another described it as a “transactional” relationship.

There may be limits to what banks can do to assist individuals if those actions are outside their expertise or prohibited by laws or regulations. Additionally, banks may not offer financial education, which could advance individuals’ financial well-being, or they may offer products that aren’t a best fit for an individual, like those with less-favorable terms. When either is the case, a bank may refer an individual to another lender or a resource provider. An individual’s journey toward credit may stall at this point, according to participants; if the credit journey continues, it may not be with the same bank, which can sever relationships already built.

“The truth is, in this country, you really have to have a relationship with a mainstream financial institution. It starts off with checking and savings accounts, and then … goes to a credit card or an auto loan or a mortgage loan.”

Nontraditional Financial Institutions

Participants described nontraditional financial institutions as check cashers, payday lenders, auto financers, rent-to-own stores, and financial technology, or fintech, companies (e.g., peer-to-peer lending; buy now, pay later; and earned wage access).At the 2025 roundtables, participants described fintech as online platforms, services and apps that offer transaction accounts or short-term credit to individuals and small businesses. Affirm, Cash App, Chime, Klarna, PayPal, Sezzle and Zelle were the examples of fintech primarily given. These institutions are also referred to as nonbanks. Like the last theme, this one describes the advantages, disadvantages and outcomes that low- and moderate-income individuals experience in their interactions with nontraditional financial institutions.

Convenience and visibility drive the use of nonbank products and services.

Convenience is the defining feature of nontraditional financial institutions. Participants identified three key aspects of convenience: availability, ease and speed. For example, payday lenders have long business hours and operate many locations in communities where low- and moderate-income individuals live, and fintech platforms, as one participant said, are “available 24 hours.” Individuals typically face fewer application requirements with nontraditional financial institutions and little or no technical language. Additionally, nontraditional financial institutions tend to move fast, so individuals might send and receive money or access credit in a matter of minutes.

“In literally three clicks on a phone, [a client] got approved for … a $1,200 loan, and it took 10 minutes to get it. I … need at least a few hours to get her documents and language in, run it through my underwriter, and get back and approve it.”

Convenience seems especially important if an individual struggles to get to the bank during business hours or needs quick access to financial services in an emergency.

“[Fintech] is available 24 hours. [A banker] leaves at 5 p.m., but a client doesn't finish their shift until 7 p.m. and has to figure out how to afford lunch for their kid or be out of the office.”

Participants also said fintech platforms are more visible in everyday life than traditional financial institutions. Fintech’s online presence, especially on social media, makes it an important way that individuals learn about and access financial services. Several participants said fintech’s availability continues to grow as more retailers offer installment loans or buy now, pay later programs.

Nonbanks have high fees and rates that can result in unaffordable payments for individuals.

The second-most discussed characteristic of nonbanks was their high rates and fees. Participants provided examples of double- and triple-digit interest rates at auto financers and payday lenders in their communities. They said rates and fees can be so high that they cost individuals as much as or more than the original loan amount itself.

“If you borrow $400, and you only pay the minimum every two weeks to roll that debt, in four months you’ve already paid back more than you borrowed, and you still owe $400.”

At first, the total cost of a loan might not be apparent to individuals, but it is understood once they face unaffordable monthly payments that strain their budgets and force them to choose between paying an auto loan or a utility bill, according to participants.

“There's a phrase that says, ‘The high cost of being poor.’ Unfortunately, … low- to moderate-income households and individuals often start using alternative fringe services, financial services, and end up paying more in fees and interest.”

Despite the high cost, nontraditional financial institutions might be the best option available to low- and moderate-income individuals to purchase items, from groceries to vacations. Participants said this is particularly true for individuals who can’t get approved for a loan from a traditional financial institution or can’t manage everyday expenses with their income.

Some individuals replace traditional financial services with nontraditional financial services and cash.

Participants noted that some individuals in their communities use a combination of nontraditional financial institutions and cash instead of traditional financial institutions. While convenience, trust in banks and other aforementioned factors play a role in the decision, participants provided yet another: Individuals may think nontraditional financial services are comparable with traditional financial services.

“Their bank is Cash App. Their bank is Chime. Their bank is Venmo. There are people still, yeah, who hold onto cash.”

Individuals may not understand that nontraditional financial services, namely fintech platforms, may not be regulated, insured or build their credit scores. Participants also said that fintech makes it harder for individuals to track spending and prepare taxes or financial statements. As a result, individuals who solely rely on nontraditional financial institutions may be in a worse financial position or have a harder time accessing traditional financial services in the future.

“A bank account is better for your business than the fintech account. [Business] owners are busy, and they wear lots of hats and might have started off that way. If you’re doing it as a gig, that’s fine, but we can’t give you a loan off a hobby.”

Resource Providers

Resource providers address gaps in financial literacy, build trust and offer support that can be a bridge to greater financial well-being. Participants identified a variety of resource providers in their communities: nonprofits, economic development centers, small-business development centers, chambers of commerce, schools, employers, and local and state agencies. This theme describes interactions with and outcomes for low- and moderate-income individuals who engage resources that improve access to traditional financial services.

Individuals are most likely to learn about banks, credit and document preparation from resource providers.

Individuals turn to resource providers to learn about banks and credit. Individuals may learn how to open a checking account or apply for a loan at a bank. Participants said the most in-demand topic is credit, and that resource providers teach individuals what credit is, how to build credit, how to pull and read their credit report, and about different credit products. Participants said individuals who learned that credit is “bad” and, in the past, avoided using it, find these topics most beneficial.

“Credit is a tool to be used. You … can break a window with a hammer, or you can build a house with a hammer. The hammer is not the problem. So, credit is not the problem. It’s how to use it correctly that needs to be the message, not that it is good or bad.”

Given the challenge that documentation presents to accessing traditional credit products, individuals turn to resource providers for assistance with their preparation. Traditional financial institutions said that they often refer small-business owners to resource providers, like a small-business development center, to assist with drafting their business plans.

“If you're a low- to moderate-income person and don't know … basic financial literacy, [and] you don't know how to manage your money, [it] can get you into a cycle of debt.”

Resource providers build and facilitate relationships that cultivate confidence and trust.

Participants said, over time, resource providers can build relationships with individuals and facilitate relationships between individuals and traditional financial institutions. Improved financial literacy and relationships can increase individuals’ confidence in their ability to manage their finances and trust in banks. Participants said that these are critical for individuals with low financial literacy to achieve financial well-being.

“It’s about making sure you’re connecting [clients] to the right people … [and] building those relationships.”

Community Approaches to Addressing Access

Participants shared their thoughts on how to improve access to and utilization of traditional financial services in their communities. This was the most popular theme of the roundtables, accounting for one-quarter of all statements analyzed, and it attests to participants’ investment in a forward-looking vision for their communities.

Expand high-quality financial education.

Participants stressed the importance of teaching financial knowledge and skills to increase access to and utilization of traditional financial services and, ultimately, to improve financial well-being.

Given the discussion of financial literacy, there was significant interest in school-based financial education. Indiana, which will require high school students to take a financial literacy course starting in 2028, served as an example to participants in Kentucky and Tennessee.Indiana Department of Education. “Personal Finance.” Participants also suggested that employers are well positioned to offer financial education. Several participants voiced the importance of offering ongoing financial education to ensure individuals can keep up with changes in the financial services sector and manage what each phase of life brings, from student loans to retirement.

“To function in our society, there’s a level of basic financial literacy that you have to have. It’s as important as being able to add or subtract or ... write. It’s put on the back burner as a ‘nice to have’ rather than a priority.”

Ensure financial services and products address the needs of individuals and households.

Participants wanted traditional financial institutions to address the challenges that low- and moderate-income individuals face when accessing financial services. The discussion focused on improving the ease and speed of accessing existing products. Several participants shared that the financial institutions they represented reduced the burden on loan applicants by lowering credit score minimums and requiring fewer documents. Others offered unsecured loans and loan approval within 48 hours. For some participants, nontraditional financial institutions served as an example of how traditional financial institutions might improve convenience.

“We need to outcompete payday lenders … and make [traditional lending] as simple as a payday loan. And we can do it, at a lower rate.”

Participants also expressed their interest in better connecting individuals to underutilized products and offering new products that respond to changing conditions in communities.

“We’d love to find ways to expand our loan portfolio and meet the needs of the community beyond the products and services we currently offer.”

Create organizational partnerships and networks.

Participants said that they wanted to get to know and work more closely with peer organizations to increase their knowledge of products and resources and build relationships in their communities.

“It's very important that we … become a part of a group, so that nonprofits and banks … are all working together to try to reach people.”

They envisioned organizations coming together to share best practices and coordinate community-level interventions, like public service announcements, that make traditional financial services as visible as fintech platforms and payday lenders. There was interest in improving referrals among organizations and creating partnerships that pair financial education with traditional financial services. Participants expressed that, together, they could serve more individuals and make it easier to access bank accounts and credit.

“We could get together and create a network. We could share information on the radio, on the news. I think the challenge is that the community doesn’t know about us, about credit. So, we set up something together and do, like, a PR run to … push it out into the community.”

Meet with individuals in their communities.

Participants said that institutions need to have a physical presence in the communities they want to serve. It is important that traditional financial institutions meet and get to know individuals in places and at times that are convenient and comfortable for them. There were several examples of traditional financial institutions holding workshops and meetings outside of their normal business hours, in barbershops, churches and small-business incubators. Participants said that the events were popular and a first step toward building relationships with and trust in banks.

“One of the things we learned early on in working with people with generational poverty is that relationships are everything. If you’re not going to sit down and make them feel comfortable, you’re not going to … provide whatever services you’re trying to provide to them. And it’s a small thing, but that’s important.”

Several participants emphasized the value of a holistic approach to serving individuals. They stressed that individuals often face crises that keep them from better attending to their financial well-being. Individuals might need to address more immediate challenges before they are able to apply for a bank account or build their credit.

Strengthen regulation of interest rates, fees and disclosures.

Participants want to keep or strengthen financial regulations to protect low- and moderate-income individuals. Faced with uncertainty about regulations, participants expressed concern regarding the future state of interest rates and disclosures.

“What does scare me is the fact that [regulation] is going away, and the cost of credit won’t be on statements. Because [if] that number goes away, it’s out of sight, out of mind.”

The bulk of the conversation focused on limiting interest rates for payday loans. At roundtables in the two Eighth District states where there were proposals to increase the limit on the interest rates charged by payday lenders, participants recommended capping or reducing them. Arkansas, which enacted a law to cap interest rates, was a model to participants.Arkansas Constitution, Amendment 89, Section 3: “Other Loans.”

Regarding disclosures, participants said that if there is less information about the cost of loans, individuals might have a harder time managing their finances. There was also a discussion that more individuals might become unbanked or underbanked if bank fees increase.

Conclusion

Community members in the Eighth District helped shed light on why adults in low- and moderate-income communities often have the least access to affordable financial services, especially credit. Individuals with low financial literacy and little trust in banks might not know how or want to access traditional credit. The speed of service at traditional financial institutions and their documentation requirements and technical language push individuals away, while the convenience of nontraditional financial institutions pulls them in, according to participants. The combination of these factors can result in low- and moderate-income individuals utilizing financial services on terms that are costly and less transparent. The journey toward access to financial services may be long and challenging for low- and moderate-income individuals.

The previous section of this report presented a quantitative look at the state of access to credit in the U.S. and Eighth District. The conversations during the St. Louis Fed’s 2025 financial well-being roundtables exemplified a broad commitment to advancing access to financial services in Eighth District communities. Roundtable participants proposed approaches that included expanding high-quality financial education, making financial services more convenient, and developing networks and partnerships among organizations. The approaches collected from participants, along with their insights into how individuals interact with financial institutions, might serve to inform the public, decision-makers and community stakeholders about ways to improve financial services for low- and moderate-income individuals and bolster their future financial well-being.