Going “De Novo:” Tapping into Emerging Markets at the Branch Level

Authors

Vivian Pacheco, Federal Reserve Bank of San Francisco

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May 12, 2008

The financial services landscape of low-income communities is often dominated by “fringe” financial services, including check cashers, payday lenders and pawn shops. However, mainstream financial institutions are increasingly learning that there are “emerging markets” in low-income neighborhoods, and that opening a bank branch in an underserved area can translate into profitable business, not just Community Reinvestment Act (CRA) credit. In fact, the industry as a whole has seen a revival of branch systems as
a way to generate retail growth.