Committee on Economic Inclusion Meeting 

December 13, 2012

Sherrie L.W. Rhine

Eric Robbins

1
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.

2
• The Bank Survey was voluntary and consisted of an Internetbased 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 November

 2011 through February 2012, with assistance from Gallup,

 Inc.

3
4
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. 

5
Banks see

community 

partnerships as 

important strategies 

to reach 

underserved 

consumers.

6

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
Automated 

telephone 

banking, 

multilingual staff, 

and off-premise 

ATM locations 

were the most 

frequently chosen 

retail strategies. 

7

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 Staff

Available

Extended Banking Hours

Non-Traditional Branch

Format/Design

Off-Premise ATMs in

Retail Establishments

Non-Traditional Location
Almost half of 

all banks 

required an 

initial deposit of 

$100 or more to 

open a basic 

checking 

account. 

8

15 16 17

42

6

05

10

15

20

25

30

35

40

45

Percentage of Banks

$0 $1-$49 $50 $100 > $100
Nearly two-thirds 

of all banks 

charged no 

monthly 

maintenance fees 

on basic checking 

accounts, though 

one in five charged 

more than $3 per 

month on accounts 

without direct 

deposit. 

9

65

10

22

72

8

17

0

10

20

30

40

50

60

70

80

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

Monthly Maintenance Fee

without Direct Deposit

Monthly Maintenance Fee

with Direct Deposit

Percentage of Banks
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. 

10
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. 

11
Few banks offered a card-based “checkless” checking 

account as their most basic, entry level account. 

• Among all banks, 21 percent offered electronic (cardbased) 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). 

12
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.

13
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. 

14

82

41

9

4

87

0

10

20

30

40

50

60

70

80

90

100

Youth Savings

Accounts

Specialized Savings

Clubs

Workplace-Based

Savings

Individual

Development

Accounts (IDAs)

At Least One

Specialized Savings

Products

Percentage of Banks
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. 

15

58

40

73

83

0

10

20

30

40

50

60

70

80

90

Non-US Passport Other Foreign ID Individual Taxpayer

ID Number (ITIN)

Foreign Passport,

Other Foreign ID, or

ITIN

Percentage of Banks
Most banks offered check-cashing, bank checks, money 

orders, and remittances for existing accountholders, but 

not for others. 

16

71 68

86

22

57

68

47

33 35

9 9 11

0

10

20

30

40

50

60

70

80

90

100

Cashing Payroll

Checks

Money Orders Bank or Other

Official Checks

In-Person ThirdParty Bill PayInternational

Remittances

Domestic

Remittances

Percentage of Banks

Basic/Entry-Level Accountholders Noncustomers
Eight out of 

ten banks 

offered small

(under $2,500) 

unsecured 

personal 

loans. 

17

43

53

4

0

10

20

30

40

50

60

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

Percentage of Banks
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.

18

81

89

92

74

76

78

80

82

84

86

88

90

92

94

Repayment Period

90+ Days

APR of 36 Percent

or Less

Streamlined Application

Process

Percentage of Banks
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 74

percent of banks providing financial education and outreach 

activities at these sites. 

19
20

48

51

56

81

0

10

20

30

40

50

60

70

80

90

Teach Basic Financial

Education Topics

Funding to Community

Partners

Provide Technical

Expertise

Free Counseling

Percentage of Banks
21

33 30

74

11

53

23

1

41

0

10

20

30

40

50

60

70

80

90

100

Public

Fairs/Gatherings

Workplaces K-12 Schools Government Sites Bank Branches Vocational

Schools/Colleges

Military

Installations

Non

profit/Community

Organizations
About onethird of banks 

identified 

fraud as the 

largest 

perceived 

major 

businessrelated 

challenge for 

banks in 

serving the 

underserved. 

22

17

28

14

25

42

39

47

39

28

16

32

24

0 10 20 30 40 50

Underwriting

Nonbank

Competition

Fraud

Profitability

Major Obstacle Minor Obstacle Not an Obstacle
Thirty percent 

of banks 

reported that 

consumers’ 

lack of 

understanding 

of financial 

products and 

services was a 

major productrelated 

challenge.

23

26

19

40

10

30

55

37

42

43

45

19

18

6

31

12

0 20 40 60

Effective Product

Marketing

Lack of Customer Demand

Lack of Familiarity with

Consumer Needs

Lack of Consumer

Understanding

Product Development

Major Obstacle Minor Obstacle Not an Obstacle
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.

24

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

Major Obstacle Minor Obstacle Not an Obstacle
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.

25
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

26