FDIC releases first national survey of banks' efforts to serve the unbanked and underbanked MortgagePress.comFDIC, unbanked, underbanked, Federal Deposit Insurance Corporation, Martin J. Gruenberg, Federal Deposit Insurance Reform Conforming Amendments Act of 2005
In the first national survey of banks' efforts to serve unbanked
and underbanked individuals and families in their market areas, the
Federal Deposit Insurance Corporation (FDIC) found that improvement
may be possible in the areas of focus, outreach and commitment. The
majority of banks--63 percent--offer basic financial education
materials, but fewer participate in the types of outreach efforts
that are viewed by the industry as most effective to attract and
maintain unbanked and underbanked individuals as long-term
customers.
The bank survey, which was voluntary, was administered in 2008
to a nationally representative random sample of about 1,300
FDIC-insured banks and thrifts; 685 completed surveys were
returned, representing a 54 percent response rate. Case studies
were also developed for 16 banks that are employing innovative ways
of serving unbanked and/or underbanked individuals.
"Access to a basic bank account and to financial services is a
starting point for economic opportunity," said Martin J. Gruenberg,
FDIC vice chairman. "Unfortunately, millions of Americans lack
access to insured financial institutions. The FDIC survey shows
that most banks are aware that significant unbanked and underbanked
populations exist in their areas, but more can be done to reach out
to this significant market. Government and industry need to work
together to increase these individuals' access to the mainstream
banking system."
Among other key findings of the study are:
" While most banks offer basic checking accounts to all
customers, few offer deposit, payment, credit and electronically
based products that address the unique needs of unbanked and
underbanked customers.
" Banks are concerned about the profitability of doing business
with unbanked and underbanked individuals as well as perceived
regulatory issues related to anti-money laundering laws and
regulations.
Among the findings regarding banks' efforts to improve access
through retail branch operations and strategies are:
" Over half of banks offer limited extended hours and foreign
language capabilities at their retail branches.
" Almost two-thirds (64 percent) of banks report that they have
modified their retail operations in the last five years to make the
bank more appealing or convenient for unbanked and/or underbanked
customers.
" The study recommends defining a national shared
government-industry goal to lower the number of unbanked and/or
underbanked individuals and households in the U.S. and the creation
of a national task force to provide oversight and guidance for the
achievement of the shared goal to encourage banks to offer products
and services designed to increase access of unbanked and/or
underbanked individuals to the mainstream banking system.
This survey was mandated by Section 7 of the Federal Deposit
Insurance Reform Conforming Amendments Act of 2005. The Reform Act
requires that the FDIC conduct biennial surveys of insured
depository institutions' efforts to bring individuals and families
who have rarely, if ever, held a checking account, a savings
account or other type of transaction or check-cashing account at an
insured depository institution into the conventional finance
system.
For a copy of FDIC Survey of Banks' Efforts to Serve the
Unbanked and Underbanked, Executive Summary of Findings and
Recommendations, February, 2009, click
here.
For more information, visit www.fdic.gov.
