Banks and Payday Advance Lenders Cross Paths in Mesa
By Paul RizzoPayday Loan Writer
In banking terminology, the west Mesa area is “underbanked.”
By any measure, however, the area is oversaturated with instant payday loan stores.
Therefore, it should come as little surprise that when setting up a handful of new locations for banks in west Mesa during the last year, Washington Mutual ran into an unexpected neighbors:
- Their locations are sharing strip centers, city blocks and even parking lots with payday loan stores.
Due to the glut of payday advance stores occupying busy street corners in west Mesa, it was, in many ways, unavoidable.
The new branch at Dobson and Baseline roads is in the same strip center as a payday loan outlet; the new branch at Dobson and Main Street shares a parking lot with a payday loan store; and the new branch at Southern Avenue and Mesa Drive sits across a busy thoroughfare from a payday loan store.
“I guess that’s just kind of an anomaly. We don’t target or have anything to do with payday loan centers,” said Jim Linker, a vice president and senior regional manager in the Valley for Washington Mutual. “We do a rigorous look at each market that we go into. Those are good communities. They match up well with the products and services that we have available.”
While the banks likely won’t make a dent in the number of fast cash loan providers in west Mesa - an issue the City Council nearly dealt with through regulations this year - their presence could lead to a more market-based solution toward curbing the numbers of so-called predatory lenders in Mesa.
The payday stores typically have customers in search of wire transfers, cheap check cashing service or, for loans, those who have poor credit and can’t or won’t get a long-term loan from a bank and who are willing to pay high interest for a short-term, bad credit payday loan.
There are more than 100 payday loan stores in the city, with the majority concentrated in Mesa’s west side.. There are nearly 200 banks spread throughout the city, but a noticeable dearth in that same area of Mesa.
That’s what drew Washington Mutual to the locations in the first place, Linker said.
“Our main market is middle America, that’s what our bread and butter is and that’s the communities we serve. This pretty much fits the model that we have everywhere,” Linker said, noting the bank’s free checking services, and the ability to open a checking account with as little as $1.
“If you drive around the area and you look at them, they’re all growing areas,” he said. “If you look at Dobson and Main, there’s a bunch of new retail going in. There’s basically been some revitalization in those areas and those communities are trying really hard. It makes sense for us to be there.”
The banks’ mere presence in “underbanked” neighborhoods probably won’t curb the use of faxless cash advance stores. One typically needs a bank account to take out a payday loan in the first place, but the bankers are hoping the increased availability will encourage more residents to take advantage of services banks offer, such as checking and savings accounts.
That will likely come as efforts to educate Arizonans about the benefits of banking start to produce results, said Tanya Wheeless, president and CEO of the Arizona Bankers Association.
That’s especially true for immigrant Arizonans, whom the ABA has targeted with education campaigns in hopes of steering them away from no fax payday loans, Wheeless said.
“What we’ve found is there are often cultural barriers that prevent customers from wanting to use banks,” Wheeless said, noting that immigrant populations often have concerns about having money in accounts and getting deported, or traveling to Mexico and not being able to access their money from across the border.
The Federal Reserve is working on that issue, but overcoming those other barriers falls to education, Wheeless said.
“It’s education and to some extent that’s marketing,” she said. “By reaching out that may mean advertising in Spanish, on Spanish radio stations, to let them know that a lot of the customers that are using payday lenders or check cashers, often could have mainstream checking accounts, and they’re not aware of that.”
