Florida Banking November 2021

GOVERNMENT RELATIONS

SOME THOUGHTS ON THE UNBANKED

BY ANTHONY DIMARCO, FBA EXECUTIVE VICE PRESIDENT AND DIRECTOR OF GOVERNMENT AFFAIRS

A recent refrain in progressive circles is that the financial system is leaving the unbanked or underbanked behind. Many progressive groups have used this to justify such plans as public banks, postal banks or FedAccounts to push their agenda. While there is work to do to reduce the number of the unbanked and underbanked, much progress has been made by the marketplace and should be noted. The FDIC released its biennial survey “How America Banks: Household Use of Banking and Financial Services,” which found that a record 95 percent of U.S. households have a bank or credit union account in 2019. The survey found that between 2017-19 more

somewhat interested. Interest in an account was higher among those who had been previously banked, and among African-American households over white households. • Use of non-bank credit, such as payday loans or title loans, declined from 8 percent of households in 2015 to nearly 5 percent in 2019. Historically, the number of unbanked households continues to decline from 8.2 percent in 2011 to 5.4 percent today. The FDIC has undertaken its survey again this summer and results are expected sometime next year. It will be interesting to see the effect of the pandemic on this statistic.

than 1.5 million households opened bank or credit union accounts (hereinafter simply bank accounts). Other key findings include: • Mobile banking continued to rise, more than doubling between 2017-19. • Nearly half of the unbanked households reported that they did not have enough money to meet minimum deposit requirements. • Roughly one-third of

Although the number of unbanked households continues to decline, banks need to continue our efforts. One example of this effort is Bank On. This is a program developed by the Cities for Financial Empowerment Fund (CFE) for certified deposit accounts which include features such as low costs, online bill pay, no overdraft fees, and debit or prepaid cards. Many banks have joined this program, you may wish to check it out too.

“ ALTHOUGH THE NUMBER

OF UNBANKED HOUSEHOLDS CONTINUES TO DECLINE, BANKS NEED TO CONTINUE OUR EFFORTS. ”

unbanked households stated that they did not have a bank account because they did not trust banks. • While the number of unbanked households declined, the number of African-American households still without a bank account was 14 percent and 12 percent for Hispanic households. • Among the unbanked more than half were not interested in getting a bank account while approximately one quarter were very or

Another solution to the unbanked is to help minority-owned banks. Recently, the FDIC announced a priority of Chairman Jelena McWilliams, the “Minority Depository Institutions Program.” According to the FDIC, the goal of the Program is to stand up “the Mission-Driven Bank Fund to help channel private investment in mission-driven banks – FDIC-insured MDIs and Community Development Financial Institutions (CDFIs) – to build size, scale, and capacity in these banks. These institutions already play

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