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FDIC Model Safe Accounts Pilot 

Final Report

FDIC Advisory Committee on 

Economic Inclusion Meeting

April 26, 2012

Sherrie L.W. Rhine, Senior Economist

Susan Burhouse, Senior Financial Economist

Division of Depositor and Consumer Protection
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Purpose

Conduct a one-year pilot to determine the feasibility 

of insured depository institutions offering safe, lowcost transaction and savings accounts to help meet the 

needs of the almost 26 percent of U.S. households 

that are either unbanked or underbanked. 
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Consumer Protections

 These low-cost accounts are:

 FDIC insured 

 Covered under consumer protection laws and 

regulations, such as Regulation E (Electronic 

Funds Transfer) 
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Participating Financial Institutions

 Bath Savings Institution, Bath, Maine

 Citibank, New York City, New York

 Cross County Savings Bank, Middle Village, NY

 First State Bank, Union City, Tennessee

 ING DIRECT, Wilmington, Delaware

 Liberty Bank and Trust Co, New Orleans, Louisiana

 Pinnacle Bank, Lincoln, Nebraska

 South Central Bank, Glasgow, Kentucky

 Webster Five Cents Savings Bank, Webster, Massachusetts
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FDIC Model Safe Accounts 

Template

 Provides insured institutions with guidelines for 

offering cost-effective transaction and savings 

accounts that are safe and affordable for consumers. 

 Guiding principles are: 

 Transparent charges 

 Fees that are reasonable and proportional to costs 

 Access to banking services that feature FDIC insurance and 

other consumer protections

 Standard customer identification rules applied. 
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Transaction Acct

 Electronic, card-based 

account

 No overdraft or NSF fees

 Free: direct deposit, 

automatic saving, and

online access 

 Open bal. $10 - $25

 Monthly min bal. $1

 Monthly maint. fee up to $3

 Money orders/e-checks 

2 free/mo

Savings Acct

 Interest bearing

 Free: direct deposit, 

automatic saving, and 

online access 

 Opening bal. $5

 Monthly min bal. $5

 Monthly maint. fee

 free if min balance met 

Core Features and Fees
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 Transaction and Savings Accounts

 Financial education

 Link transaction and savings account

 Line of credit

 Small-dollar loans

 Kiosk bill payment 

 Domestic/international wire transfers 

Auxiliary Services and Features
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RESULTS
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Transaction Accounts

 Account retention was in line with other transaction 

accounts:

 662 opened

 126 closed

 536 (81%) remained open 

 Average opening balance among banks was $244, 

ranging from $200 to $400

 Average monthly balance among banks was $243, 

ranging from $200 to $300
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Savings Accounts

 A relatively small number of savings accounts closed 

during the pilot

 2,883 opened

 141 closed

 2,742 (95%) remained open 

 Different business models were employed for 

opening savings accounts. This resulted in widely 

varied average opening and monthly balances across 

institutions.
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Feasibility

 The majority of institutions reported that the cost of 

offering Safe Accounts was roughly the same if not 

lower than the costs of offering other deposit 

accounts because the pilot accounts have no paper 

check-related costs. 

 Measurement issues and complicating factors include:

 Different accounting methodologies, creating a lack of 

uniformity in defining and allocating fixed and variable 

costs 

 Varied general business operations across institutions

 Limitations from technology infrastructure
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LESSONS LEARNED
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Emerging Business Models

 Many different business models emerged, suggesting 

that the Model Safe Accounts Template is flexible 

enough to be used in a wide variety of circumstances.

 Models employed by participating banks are: 

• partnership

• re-entrant

• new entrant

• cross-selling

• internet
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Real Time, Front-Line 

Relationship Building

 Real time, front-line relationship building provided 

by tellers and customer service representatives was 

important for many of the pilot banks.

 Tellers/Customer Service Reps were trained to offer 

Safe Accounts and provide basic financial education 

to potential customers who would be ineligible for 

other deposit accounts.
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Potential Risks

 Banks concerned about fraud and overdraft risks 

 The incidence of accounts holding negative 

balances was reported to be relatively low. 

 Several pilot institutions stated that any concerns 

they may have harbored about potential fraud risk 

at the beginning of the pilot were not realized.

 A number of pilot banks stated that they found 

Safe Accounts to be no more risky than other 

deposit accounts.
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CHALLENGES
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Marketing and Advertising

 A challenge noted by several institutions was the 

difficulty of effectively marketing and advertising 

Safe Accounts. 

 Some banks mentioned that budgetary and resource 

constraints, exacerbated by difficult local economic 

conditions, made it hard to spend adequate time and 

money on advertising. 
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Establishing a Presence in 

New Markets

 Competition—Several banks spoke about the 

challenge of reaching potential customers in 

communities where there is a strong presence of nonbank financial services providers. 

 Attracting Customers—A few pilot banks found it 

difficult to reach consumers who either had little 

experience with banks or had a negative perception of 

banks.
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Ensuring Adequate Staff Training

 A few pilot banks described the importance of 

providing effective staff training about Safe 

Accounts. 

 With effort, institutions met with success in training 

staff about Safe Accounts and offering these accounts 

to unbanked and underbanked consumers. 

 As a result of this training, consumers who might 

have otherwise been turned away, were able to open a 

Safe Account.
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Summary

 The results of this one-year pilot suggest that 

opportunities exist for financial institutions to offer 

safe, low-cost transaction and savings accounts to 

underserved and LMI consumers. 

 The fact that a large proportion of accountholders 

remained banked during the year suggests that 

consumers can maintain successful banking 

relationships using Safe Accounts. 

 The relatively low overdraft risk, in combination with 

the higher retention rates, suggests that there may be 

greater account longevity and lower costs associated 

with Safe Accounts. 
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Concluding Remarks

 Undertaking this pilot was important to informing 

economic inclusion efforts. 

 On the whole, pilot banks’ experiences suggest 

potential improvements on the template, such as 

decreasing emphasis on auxiliary services in the early 

stages of a customer’s banking relationship. 

 The majority of participating banks reported that they 

learned from the pilot and were encouraged by their 

initial experiences with offering a safe, low-cost 

account designed to meet the needs of underserved 

and LMI consumers.