FDIC 2011 Household and Bank Surveys for CT · *Note: Numbers arebased on percent of the...

July 23, 2013

1

Overviewofthe2011FDICNationalSurveyofUnbankedandUnderbankedHouseholdsIncludingResultsforConnecticut

Followedby

2011FDICNationalSurveyofBankEffortstoServetheUnbankedandUnderbanked

FDIC Community Affairs

Boston Area Office

The Boston Community Affairs staff acknowledges the members of the Unbanked Study Team: Susan Burhouse, Sarah Campbell, David Chapman, Keith Ernst, Ryan Goodstein, Leneta Gregorie, Yazmin Osaki, Luke Reynolds and Sherrie Rhine, and Eric Robbins. Ms. Osaki was especially helpful by providing the presentation template, additional data, and guidance.

GeographiesThis presentation reflects multiple geographies:

• The entire U.S.

• State of Connecticut

• Three Metropolitan Statistical Areas* (“MSAs”) –• Bridgeport‐Stamford‐Norwalk (“Bridgeport MSA”)

• Hartford‐West Hartford‐East Hartford (“Hartford MSA”)

• New Haven MSA

MSA‐level data should be considered in light of the limited sample size of certain data points (illustrated by the tables in slides 21 and 24). The Community Affairs staff recommends that the information provided below be reviewed in conjunction with the Survey Report and Appendix (see:

http://www.economicinclusion.gov/surveys/2011household/).

* Metropolitan…statistical areas…are geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics…A metro area contains a core urban area of 50,000 or more population… Each metro… area consists of one or more counties and includes the counties containing the core urban area, as well as any adjacent counties that have a high degree of social and economic integration (as measured by commuting to work) with the urban core.

(source: http://www.census.gov/population/metro/)2

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Content

• Background

• Banking Status

• Account Ownership

• Use of Alternative Financial Services

• Implications and Conclusions

3

Background• Objectives and statutory mandate

• FDIC Household Survey• Administered in June 2011 as a supplement to the Census CPS to nearly 45,000 households (84% of CPS respondents)

• Released September 2012

• Designed to yield estimates of the number of unbanked and underbanked households; their demographic characteristics, and the reasons why they are unbanked and underbanked

• First survey administered in January 2009 and released in December 2009

• FDIC Bank Survey• Results released December 2012 4

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5

FDIC Household Survey Highlights

RevisedUnderbankedDefinition

Alternative Financial Service (AFS)

Timing of Use2009 2011

Non-Bank Money OrdersNon-Bank Check CashingPayday LendingPawn ShopsRent-to-Own

Used at least once or twice a year

Used in the last

year

Refund Anticipation Loans (RALs)

Used in the last 5 years

Non-Bank Remittances Not included6

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4

DistributionofHouseholdBankingStatus:U.S.andCT

7

68.8% 77.3%

20.1%15.2%

8.2% 5.3%

2.9% 2.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

US Connecticut

Banked, butUnderbanked StatusUnknown

Unbanked

Underbanked

Fully Banked

**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)

DistributionofHouseholdBankingStatus:CTMSAs

8


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2009– 2011ChangesinUnbankedRates:U.S.,CT,andMSAs

9

7.6

5.3

4.1

5.1

6.6

8.2

5.3

1.6

5.34.8

0

1

2

3

4

5

6

7

8

9

US Connecticut Bridgeport MSA Hartford MSA New Haven MSA

2009 2011

Percentage of Households


2009‐2011ChangesinAlternativeFinancialServices(AFS)UseAmongBankedHouseholds:U.S.,CT,andMSAs

10

17.4%

13.6%

10.8%

13.4%

16.0%

18.3%

12.7%

8.9%

12.7%

14.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

US Connecticut Bridgeport MSA Hartford MSA New Haven MSA

2009 2011



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11

Unbanked and Underbanked Rates by Demographic Groups

BankingStatusofSelectGroups:U.S.

Percent Percent Percent

Select Demographic Groups Unbanked Underbanked Fully Banked

All households 8.2 20.1 68.3

Blacks 21.4 33.9 41.6

Hispanics 20.1 28.6 48.7

Foreign-born noncitizens 22.2 28.9 45.8

Unemployed householder 22.5 28.0 47.5

Income below $15,000 28.2 21.6 47.6

Unmarried female family households 19.1 29.5 48.4

Under age 24 householder 17.4 31.0 49.712


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UNbankedHouseholdsbyRegionandState

13

UNDERbankedHouseholdsbyRegionandState

14

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15

Household Demographic Composition by Banking

Status

HouseholdCompositionbyBankingStatus

• There are stark differences between the unbanked and banked

• Along some dimensions, the underbanked seem to be a blend of the unbanked and fully‐banked populations: race, age, family type

• Along other dimensions, the underbanked seem much more similar to the fully‐banked: employment and income

16

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17

UNbanked Households

Bar Graphs: 24 whites / 73 total unbanked population = 32.9%

Fractions: 24 whites / 1072 total white population = 2.3% or 1/45

RacialDistributionofUnbanked:U.S.andCT2011

18

34.7% 30.1% 33.3%

28.0% 35.6%

51.4%

33.7% 32.9%

15.3%

1.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Other

White

Hispanic

BlackUS CT ‘11

1/6 Black

1/4 Hispanic

1/45 White

*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

CT2011Results:

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21.5%13.5% 16.2%

8.2%

6.8%9.5%

30.1%

24.3%

37.8%

40.1%

55.4%

36.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Nonfamily HH

Female HOH

Male HOH

Married Couple

HHTypeDistributionofUnbanked:U.S.andCT2011

19*Nonfamily HH consists of a householder

living alone (a one‐person household) or where the householder shares the home exclusively with people to whom he/she is not related


2/23 Nonfamily

1/8 Female

1/9Male

1/69 Married

CT2011Results:

AgeDistributionofUnbanked:U.S.andCT2011

20

37.3% 39.7%50.7%

20.2%24.7%

17.8%

20.3% 11.0%9.6%

12.2%11.0% 8.2%

10.1% 13.7% 13.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

65 or older

55 ‐ 64

45 ‐ 54

35 ‐ 44

15 ‐ 34*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

1/8 65+

5/74 55‐64

1/40 45‐54

1/32 35‐44

1/8 15‐34

CT2011Results:

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AgeDistributionofUnbanked:MSAs2011

21

62.6%20.9%

16.5%

Bridgeport MSA

31.7%

27.7%

12.2%

18.7%

9.7%

Hartford MSA

68.2%

14.5%

17.3%

New Haven MSA


Note: Some categories in the pie charts have missing information because the sample size was too small to make an accurate estimate.

IncomeDistributionofUnbanked:U.S.andCT2011

22

55.8%49.3% 52.7%

26.1%28.8% 21.6%

12.4%13.7%

6.8%

4.4% 2.7%

6.8%

1.3% 5.5%

1.4%

10.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Unknown

At least $75,000

$50,000 ‐ $75,000

$30,000 ‐ $50,000

$15,000 ‐ $30,000

under $15,000

1/141 at least $75

2/247 $50 ‐ $75

1/20 $30 ‐ $50

1/9 $15 ‐ $30

2/9 under $15


CT2011Results:

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EducationDistributionofUnbanked:U.S.andCT2011

23

37.4% 40.3% 37.0%

38.1%38.9% 43.8%

20.3% 15.3% 15.1%

4.2% 5.6% 4.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

College Degree

Some College

HS Degree

No HS Degree

4/523 College

1/28 Some College

5/72 High School

2/9 No High School


CT2011Results:

HomeownershipDistributionofUnbanked:U.S.andCT2011

2422.7%

5.5% 8.2%

77.3%

94.5% 91.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Non‐Homeowners

Homeowners

1/244 Homeowners

1/9 Non‐Homeowners


CT2011Results:

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25

UNDERbanked Households

Bar Graphs: 24 whites / 73 total unbanked population = 32.9%

Fractions: 24 whites / 1072 total white population = 2.3% or 1/45

RacialDistributionofUnderbanked:USandCT2011

2622.5% 27.05% 24.87%

16.2%14.49% 16.93%

56.0%56.04% 51.85%

2.42% 6.35%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Other

White

Hispanic

Black*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

3/7 Black

1/4 Hispanic

1/9 White

CT2011Results:

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HHTypeDistributionofUnderbanked:U.S.andCT2011

27

44.1% 48.08%

31.75%

6.9% 2.88%

6.35%

19.0% 21.15%

26.46%

29.9% 27.88%35.45%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Nonfamily HH

Female HOH

Male HOH

Married Couple*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

1/8 Nonfamily

2/7 Female

1/8 Male

1/7 Married

CT2011Results:

AgeDistributionofUnderbanked:U.S.andCT2011

28

28.7%18.75%

33.68%

20.3%

19.71%

15.26%

22.1%

26.92%

21.58%

16.8%19.71% 13.16%

12.1% 14.90% 16.32%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

65 or older

55 ‐ 64

45 ‐ 54

35 ‐ 44

15 ‐ 34*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

1/9 65+

1/6 55‐64

1/6 45‐54

1/6 35‐44

1/6 15‐34

CT2011Results:

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AgeDistributionofUnderbanked:MSAs2011

29

25.7%

14.6%

19.4%

31.8%

8.5%

Bridgeport MSA

17.2%

20.1%

27.2%

17.2%

18.3%

Hartford MSA

25.6%

31.5%

31.7%

11.2%

New Haven MSA


Note: Some categories in the pie charts have missing information because the sample size was too small to make an accurate estimate.

IncomeDistributionofUnderbanked:U.S.andCT2011

3017.5% 15.87% 15.26%

23.3%19.23% 16.32%

23.9%

16.35%

10.53%

17.1%

18.27%27.37%

18.3%

30.29%

16.32%

14.21%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Unknown

At least $75,000

$50,000 ‐ $75,000

$30,000 ‐ $50,000

$15,000 ‐ $30,000

under $15,000*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

1/9 at least $75

1/6 $50 ‐ $75

1/6 $30 ‐ $50

1/5 $15 ‐ $30

1/5 under $15

CT2011Results:

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EducationDistributionofUnderbanked:U.S.andCT2011

3114.5% 14.90% 13.68%

31.6%37.50% 35.26%

31.7%25.48% 27.89%

22.2% 22.12% 23.16%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

College Degree

Some College

HS Degree

No HS Degree*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)

8/91 College

1/6 Some College

1/5 High School

1/4 No High School

CT2011Results:

HomeownershipDistributionofUnderbanked:U.S.andCT2011

32

52.0% 55.29%

43.16%

48.0% 44.71%

56.84%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CT '09

Non‐Homeowners

Homeowners


1/8 Homeowners

1/4 Non‐Homeowners

CT2011Results:

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PreviousBankingStatus:U.S.,CT&MSAs2011

33

3.7

2.0

0.8

2.2

4.0

4.4

3.1

0.8

3.0

2.4

0

1

2

3

4

5

6

7

8

9

U.S. Connecticut Bridgeport MSA Hartford MSA New Haven MSA

Never Banked Previously BankedPercentage of Households


MainReasonHouseholdsareUnbanked: U.S.2011

343.5

14.8

0.7

1.4

1.1

9.5

7.1

33.2

26.0

8.2

5.5

15.6

3.5

11.9

0.2

1.5

1.5

4.0

4.0

7.1

7.6

32.8

0 5 10 15 20 25 30 35

Do Not Know/ Refused

Other/ None of the Above

Banks do not offer the needed products or services

Banks do not have convenient hours or locations

Do not know how to open or manage an account

Previously had an account but the bank closed it

Bank account fees or minimum balance requirementsare too high

Don't like dealing with and/or don't trust banks

Can't open an account due to ID, credit, or bankinghistory problems

Do not need or want an account

Do not have enough money

Never-Banked

Previously Banked


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UnbankedHouseholds’LikelihoodofOpeningAccount:U.S.

35

21.7

39.0

22.226.0

18.9

29.4

6.6

16.1

24.4

48.0

20.4

13.5

0

10

20

30

40

50

60

Very likely Somewhat likely Not too likely Not likely at all

Per

cen

tage

of

Unb

anke

d H

ouse

hol

ds

All Unbanked Previously Banked Never-Banked

Note: Percentages are based on 9.9 million unbanked households


UnbankedHouseholds’ReasonsforWantingtoOpenanAccount:U.S.2011

36

1.3

7.0

0.3

4.2

10.0

22.6

25.7

28.8

1.6

3.7

0.6

1.6

4.4

26.2

31.0

30.8

0 10 20 30 40 50 60

Unknown

Other

To send money to family and friends

To be able to apply for a loan or mortgage

To take advantage of direct deposit of paychecks

To save money for the future

To secure your money

To write checks and pay bills

Percentage of Unbanked Households

Never-Banked

Previously Banked

Note: Percentages are based on 5.3 million never-banked and 4.4 million previously-banked households.


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TypesofBankAccountsOwnedbyUSHouseholds

37

AccountOwnership:U.S.andCT2011

38

Unbanked, 8.2

Banked but Unknown Type,

1.5

Checking and Savings

Accounts, 67.2

Savings Account Only,

2.0

Checking Account Only,

21.1

Notes: Percentages are based on 120.4 million U.S. households. Percentages may not sum to 100 because of rounding.

Checking & Savings 75%

Savings Only 2%

Checking Only 17%

Banked ‐ Account Unknown

1%UNBanked

5%

U.S.

Connecticut

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AccountOwnership:MSAs2011

39


Savings Only 2%

Checking Only 13%


1%

Unbanked 2%

Bridgeport MSA


Savings Only 2%

Checking Only 17%


1%

Unbanked 5%

Hartford MSA


Savings Only 3%

Checking Only 22%


0%

UNBanked 5%

New Haven MSA

AccountOwnershipbyIncome:U.S.2011

40

65.9

83.5

91.995.7 97.9

37.4

56.3

69.8

80.5

89.3

0

10

20

30

40

50

60

70

80

90

100

Less than$15,000

Between$15,000 and

$30,000

Between$30,000 and

$50,000

Between$50,000 and

$75,000

At Least$75,000

Pe

rcen

tage

of H

ouse

hold

s

Has Checking Account Has Savings Account

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21

41

Use of Alternative Financial Services

AFSConsideredintheSurvey

• Households were asked if they had ever used the following AFS and if so, whether they were used in the last year. For some AFS households were whether they had been used in the last 30 days

• Transaction AFS: • Non‐bank money orders• Non‐bank check‐cashing services• Non‐bank remittances

• Credit AFS: • Payday lending• Pawn shops• Refund anticipation loans (RALs)• Rent‐to‐own agreements

42

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22

TimingofAFSUse:US, CTandMSAs2011

4325.4

17.514.1 15.8

20.0

17.4

13.2

9.4

13.5

20.8

54.3

67.1

75.468.3

55.9

2.9 2.2 1.2 2.4 3.4

0

10

20

30

40

50

60

70

80

90

100

U.S. Connecticut Bridgeport MSA Hartford MSA New Haven MSA

Unknown

Never Used

Used but Not in thelast 12 months

Used in the last 12months


ReasonsHouseholdsUseAFS–TransactionProducts:U.S.2011

44

Non‐bank Money Orders Non‐bank Check Cashing

Notes: Percentages based on unbanked and underbanked households that have ever used each product. Percentages may not sum to 100because of rounding.

Unbanked Underbanked

0.9

5.2

2.3

27.3

3.8

2.0

19.4

39.1

0.9

9.3

0.4

1.7

2.5

2.5

28.0

54.7

0 10 20 30 40 50 60

Don't Know/ Refused

Other

Do not trust banks

Don't have a bank account

The place feels more comfortable than a bank

Banks do not sell money orders

Banks charge more for money orders

The place to purchase money orders is moreconvenient

1.9

4.2

1.6

2.5

2.4

1.9

6.6

38.9

11.3

28.7

1.1

9.6

0.9

1.0

1.6

2.1

3.4

10.1

18.4

51.8

0 10 20 30 40 50 60

Don't Know/ Refused

Other

The place to cash checks asks for fewer IDs

Do not trust banks

Banks don't cash checks

Feel more comfortable than at a bank

Bank charges more to cash checks

Don't have a bank account

To get money faster

The place is more convenient

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ReasonsHouseholdsUseNon‐bankRemittances:U.S.2011

45

2.9

2.7

29.5

8.4

3.7

6.9

19.2

25.0

10.5

0.7

1.8

5.1

9.4

13.0

25.0

1.71.3

33.2

0 10 20 30 40 50 60

Don't Know/ Refused

Other

Do not trust banks

Don’t have a bank account

The place to give or send money feels morecomfortable than a bank

Banks don’t send money abroad

A bank charges more to send money abroad

The money gets there faster

The place to give or send money has moreconvenient hours or location

Underbanked

Unbanked

Notes: Percentages based on 1.2 million unbanked households and 4.4 million underbanked households that have ever used non-bank remittances. Percentages may not sum to 100 because of rounding.

ReasonsHouseholdsUseAFS–CreditProducts:U.S.

46

Payday Lenders Pawn Shops

Notes: Percentages based on unbanked and underbanked households that have ever used each product. Percentages may not sum to 100because of rounding.


0.3

4.1

2.2

3.1

10.1

12.8

26.8

40.6

1.0

9.3

2.4

0.6

10.0

19.2

15.6

41.8

0 5 10 15 20 25 30 35 40 45

Don't Know/ Refused

Other

More comfortable at a pawn shop than at abank

Do not trust banks

The pawn shop is more convenient

Banks don't have small loans

Don't qualify for a bank loan

Easier to get money from pawn shop thanqualify for bank loan

1.9

6.5

4.1

0.6

9.8

25.2

17.6

34.2

1.9

0.3

1.7

13.0

13.6

19.7

42.3

7.4

0 5 10 15 20 25 30 35 40 45

Don't Know/ Refused

Other

Do not trust banks

Payday loan service feels more comfortablethan a bank

The payday loan place is more convenient

Don't qualify for bank loan

Banks don't make small-dollar loans

Easier to get a payday loan than to qualify fora bank loan

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24

ReasonsHouseholdsNeedAFSCreditFunds:U.S.

47

3.4

7.5

0.1

0.9

1.6

4.3

9.5

19.1

53.6

4.3

13.8

0.6

2.5

2.2

4.7

11.8

17.1

43.0

0 10 20 30 40 50 60

Don't Know/ Refused

Other

For legal expenses

For medical, dental or death expenses

For school or childcare expenses

For special gifts or luxuries

For house or car repairs or to buy an appliance

To make up for job loss or decrease in income

For basic living expenses


Notes: Percentages based on 1.6 million unbanked households and 5.6 million underbanked households that have ever used credit AFS. Percentages may not sum to 100 because of rounding.

48

Implications(IllustratedbyU.S.– leveldata)

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25

Implication1• Understanding segments better might increase the efficacy of economic inclusion strategies

• E.g., unbanked Hispanic households use AFS more actively than any other racial ethnic group (52% used AFS in the last 30 days), but 30% use no AFS

49

Implication2• Having a bank account does not guarantee long term participation in the banking system

• Half of all unbanked households had an account previously

• Nearly half (48.2 percent) of these report they are likely to open another

• Almost one‐quarter of fully banked households used AFS in the past

50

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26

Implication3• Experience with banks appears to have more positive perceptions of having an account and rely less on AFS

• E.g., unbanked households that previously had an account are more likely to see value in being in the banking system:

• More likely to open an account

• Less likely to say “I don’t want or need an account”

51

Implication4• Banks might need to more clearly demonstrate the value of an account to AFS users

• AFS users perceived non‐bank services to be more convenient, faster, less expensive, or to present lower barriers to qualification

• E.g., mobile technologies that allow remote deposit capture might alter check cashing equation

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July 23, 2013

27

SummaryFindings– U.S.• Opportunity to increase banking engagement

• 8.2 percent of households are unbanked (0.6 percentage point increase from 2009)

• 20.1 percent are underbanked

• Opportunity to increase savings account ownership• 29.3 percent of households do not have a savings account (10.3 percent do not have a checking account)

• A sizeable portion of households use AFS• One quarter of households have used AFS in the last year (10 percent have used 2 or more AFS)

• 12 percent have used AFS in the last 30 days (40 percent of unbanked and underbanked)

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Boston Alliance on Economic Inclusion

July 23 2013

Timothy DeLessio

54

Members of the Unbanked Study Team: Susan Burhouse, Sarah Campbell, David Chapman, Keith Ernst, Ryan Goodstein, Leneta Gregorie, Yazmin Osaki, Luke Reynolds, Sherrie Rhine, and Eric Robbins.

July 23, 2013

28

Objectives

• Identify and quantify the extent to which insured depositories reach out to, serve, and seek to meet the banking needs of unbanked and underbanked individuals and households.

• Identify challenges affecting the ability of insured depository institutions to serve unbanked and underbanked individuals and households.

• Identify strategies that depositories used to offer financial products and services to unbanked and underbanked individuals and households.

55

• The Bank Survey was voluntary and consisted of an Internet‐based questionnaire administered to a nationally representative random stratified sample of 707 retail bank headquarters, with 567 banks (80 percent) responding.

• Through the survey design, banks are grouped into one of three asset size categories:

• the largest 25 banks (with assets greater than $38 billion)

• smallest institutions (with assets less than $1 billion)• midsize banks (with assets between $1 billion and $38

billion)

• Internet‐based survey was administered from November2011 through February 2012.

56

July 23, 2013

29

In a few instances, Connecticut banks were reviewed separately based on information provided by each bank’s specific website. Roughly 32 banks with headquarters in Connecticut were included in the study. This was conducted by members of FDIC’s Community Affairs Staff in July 2013.

57

58

July 23, 2013

30

Four out of ten banks develop products and services for underserved consumers.

• Almost 43 percent of banks were actively involved in developing products and services for underserved consumers.

59

Banks see

community

partnerships as

important strategies

to reach

underserved

consumers.

60

TV or radio advertising, 6

Print advertising, 29

Email or social media marketing, 1

Direct mail, 8

Billboard advertising, 6

Community Outreach Collaborations, 39

Other, 10

July 23, 2013

31

Automated telephone banking, multilingual staff, and off‐premise ATM locations were the most frequently chosen retail strategies.

61

30

62

28

8

43

37

38

40

10

0 20 40 60 80

Other

Automated (IVR)Telephone Banking

Mobile (Cell Phone)Banking

Online (Internet)Banking

Multilingual StaffAvailable

Extended Banking Hours

Non‐Traditional BranchFormat/Design

Off‐Premise ATMs inRetail Establishments

Non‐Traditional Location

62

July 23, 2013

32

63

15 16 17

42

6

0

5

10

15

20

25

30

35

40

45

Percentage of Banks

Note: Proportions are calculated based on all banks where balance requirements are for accounts where paycheck direct deposit is not in use. No respondents reported a minimum opening balance of between $50 and $100.

United States

12

4

10

32

1

0

2

4

6

8

10

12Number of Banks

Connecticut

64

65

10

22

72

817

0

10

20

30

40

50

60

70

80

$0 $1 to $3 > $3 $0 $1 to $3 > $3

Monthly Maintenance Feewithout Direct Deposit

Monthly Maintenance Feewith Direct Deposit

Percentage

of Ban

ks

United States

1

24

3 47

25

0 00

5

10

15

20

25

30

Unknown $0 $1 to $3 > $3 Unknown $0 $1 to $3 > $3

Monthly Maintenance Feewithout Direct Deposit

Monthly Maintenance Feewith Direct Deposit

Connecticut

Number of Ban

ks

July 23, 2013

33

The median charge for overdraft payments and on checks and other items rejected for nonsufficient funds were both $28.

• In the large majority of cases, banks charged the same amount for overdraft payments or when items were rejected due to nonsufficient funds.

65

Two out of ten banks offered a “second chance” account to individuals that do not qualify for a basic checking account.

• The survey found that 21 percent of banks offered a “Stepping Stone” or “Second Chance” account to individuals not qualified for conventional accounts.

66

July 23, 2013

34

Few banks offered a card‐based “checkless” checking account as their most basic, entry level account.

• Among all banks, 21 percent offered electronic (card‐based) accounts as their most basic transaction account product.

• Fewer—less than 1 percent of banks—offered a strictly card‐based, electronic account (i.e., an account that does not allow at least some paper checks to be written).

67

Banks required a median minimum initial deposit of $100 to open a basic savings account, though most banks did not charge a monthly maintenance fee if minimum average balance requirements were met.

• The median minimum average balance to avoid a monthly fee was $100. If the minimum average balance requirement was not met, the median monthly maintenance fee was $2.50.

• Connecticut: The median minimum average balance to avoid a monthly fee was $200. If the minimum average balance requirement was not met, the median monthly maintenance fee was $2.

68

July 23, 2013

35

More than eight out of ten banks offered specialty savings products, such as youth savings accounts.

• A majority of banks (87 percent) offered at least one specialty savings products.

69

82

41

94

87

0

10

20

30

40

50

60

70

80

90

100

Youth SavingsAccounts

Specialized SavingsClubs

Workplace‐BasedSavings

IndividualDevelopmentAccounts (IDAs)

At Least OneSpecialized Savings

Products

Percentage

of Ban

ks

Most banks accepted non‐traditional forms of identification to open accounts.

• A majority of banks accepted a non‐US passport or some other nontraditional form of identification (ID) from prospective customers.

70

58

40

73

83

0

10

20

30

40

50

60

70

80

90

Non‐US Passport Other Foreign ID Individual TaxpayerID Number (ITIN)

Foreign Passport,Other Foreign ID, or

ITIN

Percentage

of Ban

ks

According to an article published in 2007 by Fox News, New Haven CT is the very first city to offer identification cards to illegal immigrants. These cards allow immigrants to "open bank accounts and use other services that my be unavailable without driver's licenses or state‐issued IDs.“ (Elm City ID Card)

July 23, 2013

36

Most banks offered check‐cashing, bank checks, money orders, and remittances for existing accountholders, but not for others.

71

7168

86

22

57

68

47

33 35

9 9 11

0

10

20

30

40

50

60

70

80

90

100

Cashing PayrollChecks

Money Orders Bank or OtherOfficial Checks

In‐Person Third‐Party Bill Pay

InternationalRemittances

DomesticRemittances

Percentage of Banks

Basic/Entry‐Level Accountholders Noncustomers

Eight out of ten banks offered small

(under $2,500)

unsecured personal

loans.

72

43

53

4

0

10

20

30

40

50

60

No Minimum $1 to $2,500 More than $2,500

Percentage

of Ban

ks

July 23, 2013

37

Banks offering small dollar loans tended to do so with repayment terms of 90 days or longer, with annualized rates at or below 36 percent, and with loan approvals in less than 24 hours.

73

81

89

92

74

76

78

80

82

84

86

88

90

92

94

Repayment Period90+ Days

APR of 36 Percentor Less

Streamlined ApplicationProcess

Percentage of Banks

74

July 23, 2013

38

Eight out of ten banks reported providing free counseling to underserved consumers.

• Free counseling was the most frequently used and highly rated financial education and outreach activity targeted to unbanked and underbanked consumers.

• The most common locations were K-12 schools, with 74percent of banks providing financial education and outreach activities at these sites.

75

76

4851

56

81

0

10

20

30

40

50

60

70

80

90

Teach Basic FinancialEducation Topics

Funding to CommunityPartners

Provide TechnicalExpertise

Free Counseling

Percentage of Banks

July 23, 2013

39

77

3330

74

11

53

23

1

41

0

10

20

30

40

50

60

70

80

90

100

PublicFairs/Gatherings

Workplaces K‐12 Schools Government Sites Bank Branches VocationalSchools/Colleges

MilitaryInstallations

Nonprofit/Community

Organizations

78

July 23, 2013

40

About one‐third of banks identified fraud as the largest perceived major business‐related challenge for banks in serving the underserved.

79

17

28

14

25

42

39

47

39

28

16

32

24

0 10 20 30 40 50

Underwriting

NonbankCompetition

Fraud

Profitability

Major Obstacle Minor Obstacle Not an Obstacle

* The proportion of banks responding to each challenge does not sum to 100% because don’t know or non‐responses are excluded from the chart.

Thirty percent of banks reported that consumers’ lack of understanding of financial products and services was a major product‐related challenge.

80

26

19

40

10

30

55

37

42

43

45

19

18

6

31

12

0 20 40 60

Effective ProductMarketing

Lack of Customer Demand

Lack of Familiarity withConsumer Needs

Lack of ConsumerUnderstanding

Product Development



July 23, 2013

41

One in three banks (35%) cited regulatory requirements as major obstacles in serving unbanked and underbanked consumers and an additional 30% cited them as a minor obstacle.

81

16

21

16

11

23

41

43

49

48

30

20

35

34

40

35

0 10 20 30 40 50 60

Third‐Party Risk

Fair Lending/Compliance Risk

BSA/Anti‐Money Laundering

Customer ID

Regulatory Environment



Each group has some relative strengths to draw on in their efforts to meet the needs of underserved consumers, including the following examples:

• The largest banks tended to have lower initial deposit requirements on basic checking and savings accounts and accepted a broader range of foreign identification for account opening.

• Small and midsize banks were more likely not to charge maintenance fees on basic checking and savings accounts, had lower required account balances to avoid certain fees, and charged lower fees when they applied.

• The largest banks were more likely to engage in a greater range of educational and outreach activities.

• The largest banks were more likely to report actively marketing products or services customized to the needs of the unbanked and underbanked and to offer a wider array of auxiliary products and services.

• Small and midsize banks were more likely to make unsecured personal loans in amounts under $2,500, to charge less on the auxiliary products and services they offered, and to make funds available on the same day when cashing checks.

82

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42

1. Expand Offerings of Basic, Low-Cost Checking and Savings Deposit Accounts

2. Offer Additional Transaction Services to Underserved Households, Including Noncustomers

3. Enhance Small-Dollar Loan Product Marketing

4. Utilize Partnerships with Community Organizations to Promote Checking and Savings Account Ownership

5. Consider Expanding Retail Strategies to Build Relationships with unbanked and Underbanked Consumers

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• Executive Summaryhttp://www.fdic.gov/unbankedsurveys/2011survey/2011execsummary.pdf

• Full Reporthttp://www.fdic.gov/unbankedsurveys/2011survey/2011report.pdf

• More information about the FDIC’s economic inclusion efforts are available at

http://www.economicinclusion.gov/

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July 23, 2013

43

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Tim DeLessio, Community Affairs Officer(781) 794‐[email protected]

Paul Horwitz, Community Affairs Specialist (781) 794‐[email protected]

Kip Child, Community Affairs Specialist(781) 794‐[email protected]

Contacts:

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