I think Robert Reich says it best: “many self-appointed consumer activists claim to represent the customers of this lending industry and to define their access to credit. Several allege that title and payday lenders focus on poor and elderly communities — a claim based on anecdotal examples representing a small fraction of borrowers.”
Banks do not get involved in short-term, high interest loans because of the social stigma. If these products can become competitive, it will push prices down. When prices get low enough, banks and credit unions can get into the mix and drive prices even lower. It’s economics 101: supply and demand.