CFPB: Rural Areas Are Becoming Banking Deserts

Credit union trade groups are calling for more underserved areas expansion following a CFPB report on rural areas becoming banking deserts. Learn why.

David Baumann


Apr 21



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David Baumann

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David Baumann

A squiggly pink arrow pointing downward and to the right.

Report renews credit union trade groups’ calls for greater expansion into underserved areas.

Bank and credit union consolidation is hitting rural areas particularly hard, leaving residents without the simple financial services they have become accustomed to, the Consumer Financial Protection Bureau (CFPB) said in a report Tuesday.

A fast-paced exodus of in-person banking services is underway, with rural communities ten times more likely than urban areas to be located in banking "deserts," CFPB research revealed.

“Rural people also depend more heavily on bank branches and the relationship banking they offer, but banking deserts are more common in rural areas, in part due to bank consolidation,” the report continued.

“For decades, many government agencies have turned a blind eye to pressing problems facing families, farmers, and businesses in rural communities,” said bureau Director Rohit Chopra. “The CFPB will be focusing on ways to ensure that rural communities can better access relationship banking services and achieve their economic potential.”

CFPB logo

In the report, the CFPB often uses broad terms such as “banks” or “banking” and does not distinguish between banks and credit unions.

The bureau said that, broadly speaking, rural areas have lower incomes, higher rates of poverty and challenges making ends meet. It also stated its intention to carry out additional research into the needs of residents as well as conduct roundtables with relevant stakeholders.

Impact on Credit Unions

Credit union trade groups cited the CFPB in renewing their call for Congress to pass House Financial Services Committee Chairwoman Maxine Waters’ (D-Calif.) bill that would allow credit unions to expand their fields of membership to underserved areas.

“Credit unions have always played an important role in helping those of modest means and the CFPB’s report reaffirms this mission,” said B. Dan Berger, president/CEO of the National Association of Federally-Insured Credit Unions. “By nature, the credit union industry prioritizes meeting the financial needs of those who are underbanked and left behind by big banks.”

NAFCU logo

The Credit Union National Association has likewise given it support to Waters’ bill.

Pushback from Bankers

In its own response, the trade group representing the nation’s community bankers claimed part of the blame for industry consolidation rests with credit unions.

“We also urge the CFPB to consider the very negative impact the credit union industry is having on consolidation and competition trends in rural America as they leverage their unjustified tax exemptions for the purchase of community banks,” said Rebeca Romero-Rainey, president/CEO of the Independent Community Bankers of America.


Underserved Areas and Field of Membership

To learn more about underserved areas and how they could help your credit union expand, visit our field of membership page or reach out to us directly through our FOM consulting services.

Field of Membership Expansion

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