FDIC Survey on Bank Efforts to Serve the Unbanked and Underbanked
In an effort to identify and quantify the extent to which insured banks outreach, serve, and meet the banking needs of unbanked and underbanked households, the FDIC Survey of Banks’ Efforts to Serve the Unbanked and Underbanked looks at the basic banking and other financial services currently being offered by banks. The survey finds that while banks are aware of significant unbanked and underbanked populations in their market areas, the efforts to serve those customers have been minimal.
Unbanked individuals are defined as those who do not have an account with a depository institution (a commercial bank, savings institution or credit union) or a transaction account with a money market mutual fund or brokerage firm. Underbanked individuals are those who have a deposit account but also rely on alternative non-bank financial services, such as payday lenders, for transaction or credit services.
The nationally representative sample of about 1,300 banks is the first of its kind.
Full results of the study
Review all study highlights (PDF)
Noted in the survey results:
- Serving unbanked or underbanked is not a priority of the banks
“Seventy-three percent of banks are aware that significant unbanked and/or underbanked populationsare in their market areas, but less than 18 percent of banks identify expanding services to unbanked and/or underbanked individuals as a priority in their business strategy.”
“Depository institutions cite the lack of profitability as a significant barrier to serving unbanked and underbanked individuals.”
- Banks offer few advance or credit products tailored to low-to-moderate income and/or unbanked and underbanked customers.
“Less than 6 percent of banks provide an advance on funds due to arrive by direct deposit or check.”
“While over two-thirds (69 percent) of banks offer closed-end unsecured personal loans for amounts under $5,000 [median minimum loan size is $1000], eligibility requirements may hinder access for unbanked and/or underbanked customers…94 percent of banks require a review of an individual’s credit history, 76 percent of banks look at proof of income, and 50 percent have a minimum credit score requirement.”
“Survey responses to a question asking whether banks offer ‘affordable small dollar loans’ revealed confusion about the product since a number of banks counted overdraft programs with a line of credit in their affirmative responses.”
- Nearly all banks (99 percent) charge a per-item overdraft fee on their most basic (lowest cost) transaction account
“Overdraft fees range from $8 to $38 with a median of $25. While over half (60 percent) of banks offer some type of program that will cover or waive the fee, such programs frequently involve a line of credit or transfer and may not be available to underbanked customers. Over half of banks (57 percent) that charge overdraft fees automatically close an account after a customer has a certain number of overdrafts (ranging from one to 500) or after an account has remained in negative status for a given period of time (ranging from 10 to 180 days).”
