Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

Kristopher M. Rengert

Sherrie L. W. Rhine

FEDERAL DEPOSIT INSURANCE CORPORATION

Division of Depositor and Consumer Protection

EconomicInclusion.gov

May 25, 2016

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................1

I. Introduction........................................................................ 3

A. Background and Methodology

B. Potential Limitations

C. Report Structure

II.Earning Trust and Achieving Familiarity 

Are Crucial Challenges ..................................................... 6 

A. Bank Executive Perspectives on Trust and Familiarity

B. Consumer and Counselor Perspectives on Trust in and 

Familiarity with Banks

C. Some Consumers Feel that “They Don’t Belong” in 

Banks

1. They believe that banks are only interested in serving 

wealthy customers.

2. The environment inside banks feels foreign or 

intimidating to them.

3. Many consumers feel more comfortable at alternative 

financial service providers than at banks.

4. Some consumers are concerned that they are likely 

to be rejected by banks.

D. Consumers’ Lack of Familiarity with Banks Impedes 

Access

III. Bank Strategies to Build Trust and Familiarity............ 10

A. Creating Local Partnerships

B. Establishing a Welcoming Local Presence in the 

Community

C. Reaching Local Consumers with Appropriate Language 

and Communications

D. Offering Branch Products and Services in Convenient 

Locations and During Convenient Hours

IV. Bank Strategies to Offer a Range of 

Products and Services................................................... 13

A. Bank Products and Services 

1. Gateway products and services

2. Low- or no-fee transaction accounts

3. Second-chance checking accounts

4. General purpose reloadable (GPR) prepaid cards

5. Small-dollar loan products

B. Communicating Relevance of Bank Products and 

Services in Consumers’ Financial Lives

C. Consumer and Consumer Counselor Perspectives on 

Marketing Efforts

V. Bank Strategies to Help Sustain Banking 

Relationships with Consumers ...................................... 25

A. Enhancing Staff Training, Development, and Retention

B. Developing Internet and Mobile Tools to Streamline 

Opening and Managing Accounts

VI. Bank Strategies to Ensure Business 

Objectives Are Met ........................................................ 27

A. Internally Communicating the Institution’s Commitment 

to Serving the Unbanked and Underbanked 

B. Assessing and Resolving Implementation Challenges

C. Investing in Technology, Staffing, and Training

VII. Major Implications of the Study................................... 32

APPENDIX. RESEARCH METHODOLOGY .......................... 35

1

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

EXECUTIVE SUMMARY

An estimated 7.7 percent of U.S. households did not have 

a checking or savings account (unbanked households) in 

2013.1 Among households with a bank account, 20 percent 

also used nonbank financial services to meet their financial 

needs (underbanked households). The FDIC recognizes 

that public confidence in the banking system is strengthened when banks effectively serve the broadest possible 

set of consumers. Accordingly, the agency is committed to 

helping increase the participation of unbanked and underbanked consumers in the banking system. 

The primary goal of this qualitative research was to inform 

bank efforts to develop sustainable relationships with 

unbanked, underbanked, and low- and moderate-income 

(LMI) consumers by learning more about the products and 

services banks provide and the strategies they pursue to 

better serve these consumers; how those products, services, and strategies are developed and implemented; and 

ways banks can improve their ability to develop sustainable 

relationships with these consumers. This study also provided insights into the opinions, motivations, and attitudes 

of consumers, financial institutions, and bank partners that 

can help inform bank efforts to more effectively serve the 

financial needs of these consumers.

This research was conducted between April and December 

of 2015 and consisted of a series of interviews with bank, 

nonprofit, and government executives and focus groups 

with consumer counselors and unbanked, underbanked, 

and LMI consumers. Qualitative research, including focus 

groups and structured interviews, has inherent limitations 

and any findings reflected in this report should be considered with these limitations in mind. The purpose of 

this study was not to estimate the prevalence of various 

attitudes in the consumer population, nor was it to produce 

results that are representative of all participant groups. This 

qualitative analysis also does not attempt to measure the 

impact of particular bank efforts or to determine their effectiveness. The comments made by participants were based 

on their own perceptions and experiences, which may not 

accurately reflect the full or complete information about 

current policies of banks or the standards in the financial 

industry. 

Major Findings and Implications

This qualitative study brought together the experiences of 

bankers, consumers, nonprofit executives, and consumer 

counselors to add depth to our understanding of banks’ efforts to engage unbanked and underbanked consumers. The 

study intentionally reached out to executives at banks that 

have a reputation for leadership in efforts to serve unbanked 

and underbanked consumers. Not surprisingly then, bank executives we spoke with reported that they provide a range of 

products and strategies that seem to meet the expectations 

of consumers and counselors that we interviewed. Similarly, 

banking executives indicated an understanding of the importance of providing services in convenient locations and in 

branches with welcoming and knowledgeable staff.

On the other hand, our conversations with consumers and 

counselors paint a picture of a consumer marketplace where 

banks are often perceived as untrusted and unresponsive to 

consumer needs. While the consumers and counselors that 

we spoke with were not typically customers of the banks 

included in the study, their perceptions suggest continuing 

challenges. However, we remain optimistic about this seemingly contradictory set of conversations. Indeed, it is encouraging that significant overlap exists between the products and 

services that unbanked and underbanked consumers want 

and the strategies that banks are pursuing. 

The findings made throughout this report indicate that promising opportunities exist for banks that are considering developing longer-term, sustainable relationships with unbanked and 

underbanked consumers. The report relies on direct de-identified quotes to provide a rich context for understanding the 

perspectives of research participants. 

 1 2013 FDIC National Survey of Unbanked and Underbanked Households, October 2014, page 4, available at www.economicinclusion.gov.
2 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

We draw five major implications from the findings of this 

broad-based qualitative analysis that banks and other 

stakeholders can use to enhance their efforts to serve these 

consumers: 

1. Recognize that Trust is the Foundation for Strong 

Relationships with Unbanked and Underbanked 

Consumers 

Lack of trust comes in multiple forms and stems from 

numerous causes. Adopting strategies to build or increase 

unbanked and LMI consumers’ trust in banks is a necessary 

first step to increasing their participation in the mainstream 

financial system. Similarly, maintaining and strengthening 

long-term partnerships with nonprofit organizations that 

serve residents of LMI communities can be an advantageous strategy for banks, nonprofits, and consumers.

2. Adopt a Multi-Pronged Approach to Serving LMI 

Consumers 

Banks appear to be most successful when they simultaneously implement multiple approaches to address the many 

salient challenges for serving LMI consumers. Examples of 

approaches include hiring branch staff who have cultural 

familiarity with area residents, engaging in strategic partnerships, and offering an appropriate variety of products 

and services to meet the needs of the local community and 

that can serve as “gateway” products for consumers that 

may be interested in establishing a banking relationship. 

3. Nurture Longer-Term Relationships with Community 

Partners 

Bank partnerships with nonprofit organizations and local 

government agencies are key components in their efforts 

to serve unbanked, underbanked, and LMI consumers. This 

is a “tried and true” strategy that, when executed well, is 

mutually beneficial to banks, their community partners, and 

consumers. To be most effective, however, these partnerships require significant commitments from banks and their 

partners. In particular, better communication about shared 

goals and metrics is likely to lead to greater successes for 

all participants.

4. Use Technology to Increase Efficiencies for the Bank, 

Its Partners, and Its Customers 

From text alerts that communicate timely account information to consumers, to Web portals that enable bank partners and their clients to open consumer accounts remotely, 

all groups in the study discussed how technology tools can 

help banks and their partners better serve unbanked and 

underbanked consumers. In addition to the specific efficiencies created by the tools, technology is a crucial battleground on which competition between bank and nonbank 

financial services providers takes place. 

We consistently heard from consumers and counselors 

that consumers will use the financial services that are most 

convenient to them. Banks likely will be challenged to compete with nonbank providers on physical locations (bank 

branches versus check cashers and payday lender storefronts, for example), but banks can use technology strategically to help mitigate this situation. For example, banks 

are offering technologies, such as remote deposit capture 

where deposits can be made from anywhere at any time, 

that can increase convenience for consumers and possibly 

lower branch operating costs. Added convenience can be 

a way to reduce the costs associated with using bank services and better attract more unbanked and underbanked 

consumers and retain them as customers. 

5. Develop an Understanding of Unbanked and 

Underbanked Consumers in the Bank’s Market Area 

Unbanked and underbanked consumers have wide-ranging 

perceptions about banks and their products and services, 

which, in turn, are related to the diversity within these consumer groups. Banks seeking to serve these consumers 

will benefit from understanding their situations beyond simply their unbanked or underbanked status. Products and 

strategies that will attract the interest of a consumer who 

is unbanked because she thinks she does not have enough 

money for a bank account will likely be different from those 

that will attract the interest of a recent immigrant unfamiliar 

with the U.S. banking system. Banks need to understand 

the diversity in the unbanked and underbanked populations 

and the factors that motivate these consumers, recognizing 

that diversity likely exists even among consumers in the 

same community. Banks can use this information to develop more effective strategies to engage consumers. 
3

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

I. Introduction

An estimated 7.7 percent of U.S. households did not have a 

checking or savings account (unbanked households) in 2013.2

Among households with a bank account, 20 percent also 

used nonbank financial services to meet their financial needs 

(underbanked households). The FDIC recognizes that public confidence in the banking system is strengthened when 

banks effectively serve the broadest possible set of consumers. Accordingly, the agency is committed to helping increase 

the participation of unbanked and underbanked consumers in 

the banking system. 

The primary goal of this qualitative research was to inform 

bank efforts to develop sustainable relationships with unbanked and underbanked consumers. Through interviews 

and focus groups, researchers investigated the products 

and services banks provide and the strategies they pursue 

to serve these consumers, how those products and strategies are developed and implemented, and ways banks can 

improve their ability to develop sustainable relationships with 

these consumers. 

The FDIC regularly undertakes quantitative research on economic inclusion of unbanked and underbanked consumers 

through studies, such as the Survey of Banks’ Efforts to Serve 

the Unbanked and Underbanked and the National Survey of 

Unbanked and Underbanked Households. The present study 

builds on this research by taking a qualitative approach to 

gain insights into the opinions, motivations, and attitudes of 

consumers, financial institutions, and bank partners. These 

additional insights can help inform bank efforts to more effectively serve the financial needs of unbanked, underbanked, 

and LMI consumers.

A. Background and Methodology

This research was conducted between April and December 

of 2015 and consisted of a series of interviews with bank, 

nonprofit, and government executives and focus groups with 

consumer counselors and unbanked, underbanked, and LMI 

consumers. The FDIC contracted a research consulting firm 

to conduct the research and perform the initial analysis of 

findings.

This research project began with a review of current efforts 

that banks are using to engage unbanked and underbanked 

populations.3 The purpose of this preliminary research was to 

ascertain general trends in the field and to identify effective 

approaches that were suitable for more in-depth study. Interviews were conducted with academics, government officials, 

and executives of industry and community organizations 

that had experience and expertise on the financial decision 

making of unbanked and underbanked consumers, including 

why they do not have bank accounts or use nonbank financial services, and knowledge of approaches that banks have 

taken to develop relationships with these consumers.

Based on the literature review and interviews with these experts, researchers identified several approaches that appear 

to hold promise. These include products, such as deposit 

accounts and other financial products and services that help 

meet the needs of unbanked and underbanked consumers in 

the bank’s market area, and strategies, such as partnerships 

with nonprofit organizations, marketing approaches, or staff 

development, to support bank efforts to serve unbanked and 

underbanked consumers.

As a result of the findings from the knowledge scan, the FDIC 

selected a number of promising products and strategies to 

further analyze. Interviews were conducted with executives 

from 11 banks identified as having effectively used these 

approaches. The goal of the interviews was to learn more 

about why and how banks launched and implemented their 

initiatives, identify potential challenges and lessons learned, 

and determine how the bank perceived the initiative’s effectiveness. Of the interviewed banks, five had assets of more 

than $1 billion, three had assets between $250 million and $1 

billion, two had assets between $100 and $250 million and 

one bank had assets of less than $100 million. The branch 

footprints of these 11 banks collectively include 42 states and 

span all regions of the country. 

A second series of interviews was conducted with executives from eight nonprofit and governmental organizations 

that partnered with the interviewed banks. The purpose of 

these interviews was to learn more about the organizations’ 

2 2013 FDIC National Survey of Unbanked and Underbanked Households, October 2014, page 4, available at www.economicinclusion.gov. 3 More details about the methodology are given in the Appendix.
4 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

perspectives on their partner banks’ initiatives and the extent 

to which they thought these approaches addressed the 

needs of unbanked, underbanked, and LMI consumers. The 

information collected from the first two phases help us better 

understand the motivations, obstacles, and lessons learned 

by institutions engaged in efforts to reach unbanked, underbanked, and LMI consumers. 

To gain insights from consumer counselors, eight focus 

groups were conducted in five cities: Los Angeles, CA; New 

York, NY; Jackson, MS; Mobile, AL; and Cleveland, OH. The 

selected cities were geographically diverse, represented 

different market areas, and were within the retail footprint of 

one or more banks included in the study. Sixty-four consumer 

counselors who work for nonprofit organizations that provide financial education or counseling to LMI populations in 

each of the locations participated in the focus groups. Focus 

groups included a maximum of two counselors from any one 

nonprofit organization. 

Eight additional focus groups were conducted in the same 

five cities with 79 consumers, of which 47 percent were unbanked and 23 percent were underbanked. Individuals were 

recruited through nonprofit organizations and professional 

facilities. To ensure that the focus groups in each city consisted of a diverse pool of consumers, these individuals were 

screened on a number of characteristics, including demographic background (most participants were African American 

or Hispanic), employment status, and financial experiences 

and behaviors. Two focus groups were conducted in Spanish.4

During these focus groups, financial counselors and consumers were asked about the methods LMI consumers used to 

make and receive payments, their perceptions of banks and 

nonbank providers, considerations when deciding whether to 

open or retain bank accounts; challenges or barriers consumers face when seeking to become fully banked, and feedback 

on various types of bank products or initiatives identified 

during earlier phases of the research. 

Importantly, the consumer counselor and consumer focus 

group participants were not required to be customers of, or 

to have had any experience with, the 11 interviewed banks. 

Thus, the perspectives they shared were unlikely to be tied to 

experiences they had with any bank included in this study. 

B. Potential Limitations

Qualitative research, including focus groups and structured 

interviews, have inherent limitations, and any findings reflected in this report should be considered with these limitations 

in mind. The purpose of this study was not to estimate the 

prevalence of various attitudes in the consumer population, 

nor was it to produce results that are representative of all 

banks, bank partners, counselors, or consumers. This qualitative analysis also does not attempt to measure the impact of 

particular bank efforts or to determine their effectiveness. 

The comments made by these four distinct groups were 

based on their own perceptions and experiences, which 

may not accurately reflect full or complete information about 

current bank policies or the standards in the financial industry. 

Bank executives that we interviewed were intentionally selected to capture the perspectives of individuals and institutions 

responsible for leading practices in reaching out to unbanked 

and underbanked consumers. The nonprofit and government 

executives who participated in the study worked with the 

selected banks. The products and strategies that the interviewed banks developed are not necessarily representative of 

the banking industry. 

The consumers recruited for focus groups were intentionally selected for their status as members of the unbanked, 

underbanked, or LMI population and also were intentionally 

selected to ensure participation by specific subgroups such 

as Hispanic and African American consumers. Their experiences with and perceptions about banks and nonbank 

financial service providers may not be representative of the 

general population nor the population sub-groups they represent. Similarly, consumer counselors who participated were 

identified by organizations that work with consumers who 

are similar to those recruited for the consumer focus groups. 

Again, their comments on consumer experiences with and 

perspectives about banks and nonbank providers were likely 

closely associated with the experiences of individuals participating in the consumer focus groups but may not represent 

a more generalized population of unbanked, underbanked, or 

LMI consumers. 

With these considerations in mind, we believe that the discussion about bank products and strategies, the challenges 

and lessons learned, and the perceptions and experiences of 

4 The appendix includes a breakdown of participant characteristics of the consumer focus groups.
5

consumers and counselors should offer financial institutions useful information as they consider how they could 

better serve the financial services needs of unbanked and 

underbanked consumers in their markets. 

C. Report Structure

The remainder of this report synthesizes information gathered from the four phases of this research project, organized into six chapters. 

Chapter II provides essential context for understanding the 

bank efforts that are the core focus of this research. It discusses the joint issues of trust and familiarity, namely that 

many LMI consumers interviewed, including unbanked and 

underbanked consumers, do not trust banks, and often are 

unfamiliar with many of the products and services banks 

offer. Counselors and consumers in each of the focus 

groups raised these issues. Bank executives in this study 

also report their awareness and understanding of the issue 

of consumer distrust and how it poses a barrier to serving 

unbanked and underbanked consumers. This issue underpins much of the economic inclusion efforts made by the 

interviewed banks, including the bank strategies discussed 

in each of the subsequent four chapters of this report. 

Chapter III discusses bank efforts to address trust and 

familiarity issues in order to increase their acceptance and 

successful delivery of products and services to LMI communities which likely have higher shares of unbanked and 

underbanked consumers. Strategies for addressing these 

issues are often at an institutional level, rather than at an 

individual product level, including developing local partnerships with community organizations that are trusted by 

local residents, providing bank branches in locations and 

with operating hours accessible to LMI consumers, and 

using appropriate language and communications strategies to reach out to these consumers. 

Chapter IV discusses bank strategies to offer a range of 

products and services to meet the diverse needs of unbanked, underbanked, and LMI consumers. These include 

gateway banking products and services, such as check 

cashing, as an alternative for consumers currently using 

nonbank financial services providers. Products serving the 

financial transactions needs of these consumers include 

low- and no-fee checking accounts and general purpose 

reloadable prepaid cards. This chapter also discusses strategies to help unbanked consumers re-enter the 

banking system, including second-chance accounts and 

short-term credit with affordable terms and credit building 

opportunities, as an alternative to using payday lenders. 

Chapter V addresses strategies banks use or can use to 

maintain relationships with underbanked and LMI consumers (including previously unbanked consumers). It 

describes ways banks can minimize some barriers to 

becoming and staying banked by ensuring that consumers 

have easy access to product and service information and 

the use of technology tools to streamline account opening 

and management.

The strategies described in chapter VI also relate to the 

issue of trust, in that a bank’s chances for successfully 

earning and maintaining the trust of LMI consumers and 

the organizations that support them may improve if the 

bank delivers a consistent consumer product and message 

across the institution and over time. Consumers should 

encounter bank staff in any branch who are knowledgeable about products relevant to their needs and who are 

eager to offer the product to them. Similarly, banks that 

are responsive to feedback from their community partners 

in serving LMI consumers are likely to encounter a more 

positive reception from these community organizations 

and with consumers, thereby fostering trust over time.

The report concludes with a discussion of the implications of the overall findings from this qualitative research. 

These implications are drawn with an eye toward informing 

banks, nonprofit organizations, and government agencies 

about potential efforts that may help them to engage and 

develop longer term, sustainable relationships with unbanked and underbanked consumers. 
Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

6 

II. Earning Trust and Achieving Familiarity Are Crucial 

Challenges 

Trust, and particularly the lack of or limited trust that many 

unbanked and underbanked consumers have for banks, was 

a recurrent theme throughout most of the focus groups and 

interviews conducted during this research. This is consistent 

with findings from the 2013 FDIC National Survey of Unbanked and Underbanked Households, in which the second 

most common reason unbanked households cited for not 

having a bank account was distrust or dislike of banks (34 

percent of unbanked households indicated that was a factor 

in their decision to not have a bank account, and 15 percent 

indicated this was the main reason).5

Similarly, focus group dialogue indicated that many consumers are unfamiliar with banks and banking products and 

services. For many unbanked and underbanked consumers in 

these focus groups, banks are simply foreign entities. Indeed, 

they do not consider banks to be relevant to meeting their 

financial services needs. 

This section presents quotes and synthesizes descriptions 

from several bank executives about their perceptions of the 

lack of trust some consumers feel for banks. These comments came up without prompting—bank executives were not 

directly asked in the interviews to discuss issues of trust. The 

section also includes comments from consumers and counselors about distrust and its effects on consumers’ existing 

and potential relationships with banks, as well as the lack of 

familiarity many consumers have with banks and their products. The counselor and consumer focus groups discussion 

guide included specific questions about trust; consequently 

this group’s discussion of their perspectives on trust and 

familiarity issues was substantially more detailed than that of 

the bank executives.

We present this section first because issues of trust and 

familiarity affect all of the discussions of bank products 

and strategies. Without some element of trust on the part 

of unbanked and underbanked consumers, banks will not 

be able to appeal to these consumers. Thus, it is essential 

that bank personnel and others interested in improving the 

reach of banking services into communities of unbanked and 

underbanked consumers understand this issue. Subsequent 

chapters present strategies and products that banks have 

developed to bridge these hurdles and better serve these 

consumers.

A. Bank Executive Perspectives on Trust and Familiarity

The majority of bank executives interviewed described the 

challenges of establishing trust and developing familiarity 

among unbanked and LMI consumers. One executive described the issue as follows:

“[W]hen you target an unbanked population and 

you yourself are a bank, there is a stigma that is 

associated with you amongst your target audience. 

And so, that is a very difficult barrier to overcome 

because there is a narrative that is built up within 

the mind often times among [unbanked] consumers 

around who you are, before you ever get a chance 

to tell them who you are. That is not an easy thing 

to overcome . . . So you have to know that audience well, and then you have to make good on 

every single interaction because the first impression 

is obviously going to be key in any consumer experience. It’s more so in this segment.” 

— Bank Executive

Asked about the greatest barrier in developing relationships 

with LMI and unbanked consumers, one executive said the 

following: 

“I think that banks have a bad rep . . . a lot of this 

population has had a bad experience in the past, 

you know, charged off, lots of fees. They think 

everything is fee related, it’s hidden fees, you are 

trying to pull one on over on me and you are not 

there to help me and just want to make money, that 

sort of thing. So I think that is a huge barrier.” 

— Bank Executive

5 2013 FDIC National Survey of Unbanked and Underbanked Households, October 2014, page 6, available at www.economicinclusion.gov.
7

An executive from a third bank reflected on his institution’s 

learning from offering check cashing services:

“I think [there are] a couple of learnings that we 

pulled out of our check-cashing experience . . . one 

is the bank is not necessarily the trusted source. In 

most cases, it’s the last place people are going to 

go. So as a banker, you do have to get over your 

ego, and it took us a while to understand that people would rather go to a check casher than a bank, 

most every day of the week.” 

— Bank Executive

B. Consumer and Counselor Perspectives on Trust in and 

Familiarity with Banks

Consistent with what we heard from bank executives about 

the importance of establishing trust, consumers and counselors also emphasized this issue. Participants in every focus 

group considered lack of trust in and lack of familiarity with 

banks to be important barriers to developing sustainable relationships between banks and LMI and unbanked consumers, 

confirming the importance of these issues. The consumer and 

counselor discussions provide details about various reasons 

for this distrust and lack of familiarity. In some instances, 

these conversations addressed trust explicitly. In others, consumers and counselors discussed issues such as consumers’ 

general discomfort with banks, their uncertainty about the security of funds in their bank accounts, or their concern about 

excessive and unpredictable fees.

One practitioner explained her clients’ perceptions about 

banks as follows:

“My clients [have] different ways of thinking about 

banks. I feel like younger people, whether their 

parents are from another country or whether they 

grew up here, they’re often paranoid about [banks] 

. . . They just think that the bank is a bad institution, 

and they want to stay away from it. . . . Often, it’s 

just a lack of knowledge or just like they don’t 

understand it, so they just stay away. They’re, like, 

check casher is the people they know. It’s a friendly 

place. And then I feel like a lot of clients who are 

natives to New York but had a bank account, I had 

a lot of clients who are low income but had a bank 

account and got burned. They had [an account 

with one of the] major banks . . . and there was a 

misunderstanding over overdraft fees, for example, 

and just one misunderstanding like that. And the 

banks say they explain these things when you 

open an account, but they don’t. I’ve talked to 

clients directly about exactly what the teller says, 

and it might be this tiny fine print that they don’t 

understand how the overdraft fee works. So, one 

bad thing happens, and it adds up. They just run 

away and never look back. They don’t trust it.”

— Consumer Counselor

Several counselors spoke about the legacy of historic discrimination by banks. One explained that many consumers 

remember when banks decided to intentionally withhold mortgages to minorities, and that “people have not forgiven them 

for that.” Another counselor suggested that mistrust of banks 

“might be something that is passed down” from generation to 

generation. 

Immigrants and those who work with immigrants said that 

perceptions and attitudes toward U.S. banks may be colored 

by events experienced in the consumers’ countries of origin.

“Many clients come from countries in which the 

banks went bankrupt. They lost their money. Now 

they have a great deal of mistrust of the banks, 

because they have lost their savings before.”

— Consumer Counselor

A counselor in another city made a similar point, observing 

that immigrants from Mexico remember when “the banks 

closed down and a lot of people lost all their money.” In one 

of the Spanish-language focus groups, a consumer recalled 

the government’s interference in the banking system in Venezuela and observed that “With the press of a button they turn 

everything off . . . just like they did in Venezuela.” 
8 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

C. Some Consumers Feel that “They Don’t Belong” in Banks

1. They believe that banks are only interested in serving

wealthy customers

One counselor reported clients telling her that “[banks] don’t 

want to serve me because [I have a] small account and they 

don’t care about me.” Another counselor said that clients, 

especially immigrants, believe that “If you use a bank, it’s because you have money.” A counselor in another city echoed 

this concern and observed “a mentality [that says] you need 

to already have money [to use a bank]. It’s intimidating that 

you’re going to a bank where money is kept, but you don’t 

have it there, so [consumers] don’t go to the bank because 

you’re supposed to have money if you go to a bank.” Another counselor said, “Some of our clients have kind of tacitly 

understood that, ‘I’m not their ideal customer’.” 

2. The environment inside banks feels foreign or 

intimidating to them

This perspective was shared by several focus group participants. For example, one counselor commented that 

LMI consumers feel intimidated at banks, and a counselor 

in another city noted that “Sometimes . . . you’re just not 

comfortable with using banks.” Consumers also said they 

found bankers intimidating. For example, one person said she 

feels like bankers “act like I’m better than you.” Interestingly, 

a number of focus group participants specifically mentioned 

the clothing worn by bank employees. For example, one 

counselor explained that “[Banks are] a place that doesn’t feel 

open to them [because] when you walk in to a glossy bank 

with all these people in suits . . . you don’t feel welcome in 

the space . . . so they just stay away.” A counselor in another 

city echoed this statement, observing that “suits and ties are 

intimidating.”

3. Many consumers feel more comfortable at alternative 

financial service providers than at banks

Many counselors and consumers reported that unbanked 

and LMI consumers are more familiar and comfortable with 

alternative financial service (AFS) providers (such as check 

cashers).

Counselors in several focus groups observed that the culture 

of AFS providers—for example, the demographics and dress 

of employees and the language they use—was familiar to LMI 

consumers. They noted that this familiarity makes LMI consumers feel more at ease at an AFS provider than they might 

be at a bank. 

“I think it’s also maybe cultural. They literally speak 

your language. Not so much they speak Spanish, 

but maybe it’s . . . like the Dominican population 

will go to this particular business because the 

employees of the business are Dominican and speak 

their language per se. There goes that element of 

trust again, I think.”

— Consumer Counselor

“These check cashers, they look like us. They 

speak like us . . . It’s a small little organization 

that is familiar to them. And when a person in our 

community is going into a bigger system [like a 

bank], it’s difficult. It’s very unfamiliar, and that’s a 

big barrier.”

— Consumer Counselor

“You go to payday loans and they know you by 

name. They know your family. They remember. My 

own [family] branch had been banking there for like 

the last 30 years. They don’t know me.” 

— Consumer Counselor

“When you walk in there [i.e., to a check cashing 

provider], they’re like, ‘Oh, hey! Welcome back, 

[name]. Good to see you! How’s your daughter?’ 

You know, at the bank, you don’t get all that.”

— Consumer Counselor
9

“Most of our clients don’t have an association with 

a bank, [but] they’ve been using [name of check 

casher] for years and years . . . ‘My mother did it, 

my father did it. My friends did.’ So they go there.” 

— Consumer Counselor

4. Some consumers are concerned that they are likely 

to be rejected by banks

Some consumers expressed a negative attitude about 

banking because they were denied bank products in the 

past. For example, one consumer said, “I get mad [at banks] 

because every time I go there for a loan, they turn me down.” 

A consumer in another city made a similar comment, noting 

she used a payday lender because her bank rejected her loan 

application. In her case, she had been a long-term customer, 

but the bank turned her down for a loan anyway, and she felt 

like this was a poor way to treat a customer. “They put you 

through the third degree, then you don’t get the loan, and 

that’s when I reverted to payday lenders,” she said. When 

asked whether he might try to open a bank account, one 

consumer responded, “I don’t even want to go in and do 

it, ‘cause it’s like, you go...for a checking account and they 

look at it and they’re like, ‘Oh dude, we can’t give you an 

account’.”

Counselors also mentioned that their clients have similar 

concerns, noting that LMI consumers sometimes choose to 

work with AFS providers because “they’re not going to get 

the ‘no’.” Some counselors noted that consumers sometimes 

internalize this rejection, concluding that they are “not worthy” 

of banking services.

D. Consumers’ Lack of Familiarity with Banks Impedes 

Access

Consumers expressed a lack of knowledge about bank products and services, even when offered by major institutions in 

their local market area. For example, many focus group participants were unaware of the availability of low-fee checking 

accounts offered by banks in their area. 

“I didn’t even know that they had [check cashing] in 

a in a bank . . . or prepaid. I didn’t know banks had 

that either . . . [finding out about] most of the stuff in 

a bank is by chance.”

— Consumer
Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

10 

III. Bank Strategies to Build Trust and Familiarity 

Banks have developed various strategies that help build trust 

between their institutions and unbanked, underbanked, and 

LMI consumers. These strategies also help to address consumers’ lack of familiarity with banks and the fact that they do 

not consider banks to be providers that are relevant to meeting their financial services needs. Some of these strategies 

are described below. 

A. Creating Local Partnerships

Several banks work with established, trusted partners from 

the local community (e.g., community groups, faith-based 

organizations, local government, and social service agencies) 

to build trust and educate consumers about the benefits of 

using banking services and the longer-term advantages that a 

banking relationship offers in gaining access to other financial 

products. 

Nonprofit and bank executives both commented on the effectiveness of this strategy to build trust. 

“People trust their nonprofit that they’ve been 

working with for years and years. And they trust 

them that if they’ve brought in this bank to talk 

about services then perhaps we should trust them 

too. And that’s where the relationship starts.”

— Bank Executive

Similarly, a nonprofit executive discussed the benefits of having representatives from a bank present when they provide 

financial education for consumers. The nonprofit partner can 

introduce consumers to bank employees, who will then be at 

the branch when the consumer goes to open an account.

our meetings—That was really effective at being 

able to establish some sort of trust with the financial 

institution—putting that face to the product like, 

‘This is the person that can help you at the bank.’ 

That really helped clients feel more comfortable. 

A lot of our clients had this mentality like, ‘Oh my 

God, I’m going to go to a bank and these people are 

super-intimidating,’ but they see that this individual 

comes after work and looks just like them, and it’s 

the banker that can help them open an account. 

It establishes that trust factor with them. That was 

really effective.” 

— Nonprofit Executive

Another bank executive described how his institution works 

with local nonprofit organizations to help them introduce their 

product suite, including a no-fee transaction account and other products developed to attract unbanked and underbanked 

consumers.

“What we continue[d] to do as we launch[ed our 

suite] in new markets was to work quite extensively 

with nonprofits. So we would work with nonprofits 

that were identified as working with unbanked 

populations and LMI communities.” 

— Bank Executive

A representative from one institution described the usefulness of marketing products through partners that consumers 

already trust, such as employers or community organizations. 

“[The bank had to] resign [itself] that the bank 

isn’t the most important thing in the transaction 

and not the trusted partner. . . While we’re in the 

background, if you will, and we’re the engine behind 

it, we don’t need to be that face.” 

— Bank Executive

“What also helps is just the fact that [bank name] has 

been able to also be present . . . we invited them to 

partake in our education, invited them to some of
11

B. Establishing a Welcoming Local Presence in the 

Community

A common narrative among consumers and counselors was 

the importance of creating a friendly and open environment 

to help create a safe place for consumers to seek financial 

services.

“With our families, I think it’s intimidating to walk 

in a bank and not [find] somebody that you feel 

comfortable with.” 

— Consumer Counselor

Bank executives also understood the importance of cultural 

affinity in staffing branches located in specific neighborhoods.

“[When we establish a branch in a neighborhood 

with a concentration of foreign-born residents,] we 

have people who reflect the community that speak 

the language, that know the culture, that know the 

people. We get them out of the branch and into 

the community, in terms of being involved, and as 

a result business comes in—both consumer and 

business. It’s really that deep integration into the 

community that probably works the best, in terms 

of bringing new customers in the door.” 

— Bank Executive

C. Reaching Local Consumers with Appropriate Language 

and Communications

Bank executives, consumers and counselors highlighted the 

need to connect with non-English speaking consumers.6 They 

stressed the importance of using simple language (English 

and other languages relevant to the area) and avoiding industry jargon and acronyms when talking with consumers about 

account features and fees. 

They also noted that this issue goes beyond simply speaking 

a given language, such as Spanish, but that bank staff should 

speak the appropriate level or dialect to communicate effectively with local residents.

“So I can speak Spanish and somebody else [may 

also speak Spanish], but if I’m speaking this highlevel Spanish, it won’t matter . . . you can still speak 

the same language, but I’m not communicating with 

you because I may be using really high-level words 

that are not going [to make sense to you]. You’re 

not going to understand me with how I’m speaking 

because of the level and the terminology too.”

— Consumer Counselor

Counselors also suggested that branch staff have an appreciation for the cultural and social background of residents as 

well as language skills needed to communicate with members 

of the community.

“I think it’s not only about educating the customer 

or the consumer, but it’s also about educating the 

team . . . I think more than anything, trust is built on 

having that person that you’re going to. They don’t 

necessarily need to look like me, but they need to 

understand where I’m coming from.”

— Consumer Counselor

D. Offering Branch Products and Services in Convenient 

Locations and During Convenient Hours

Several bank executives said that they strategically locate 

branches in LMI neighborhoods to increase convenience for 

local residents. They also cautioned that this strategy is difficult to maintain, due in part to difficulty in attracting a strong 

deposit base to these locations. 

Others banks intentionally place branches in locations accessible to neighborhoods of varying economic status.

“We typically . . . make sure that that branch can 

serve the low- to moderate- [income] community, 

as well as middle and upper income. [We also] place 

our branches in high traffic areas, near interstates 

6 The 2013 FDIC National Survey of Unbanked and Underbanked Households found that among households where only Spanish is spoken, 35 

percent were unbanked and 24 percent were underbanked (see Appendix, Table A-1a). The report is available at www.economicinclusion.gov. 
12 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

. . . places of business, employers. So any of our 

branches [for] the most part are going to be easily 

accessible to whatever socio-economic level there 

might be, but we are very cognizant of making sure 

our branches effectively serve the low- to moderate-

[income] community.” 

— Bank Executive

Some banks also offer nontraditional products and services in 

specific branches to meet the needs of communities served 

by those branches.

“[Our bank is] focusing [its check cashing service] 

on communities where check cashing is a common 

product used within a specific geography. . . . We 

have chosen to launch this product specifically 

in branches that are within a [short distance] of 

heightened check-cashing use or opportunity 

because we want to be where the clients are 

looking for this product and this service.”

— Bank Executive

Consumers also brought up the importance of branches 

maintaining nontraditional hours and days of operation to 

accommodate diverse schedules. Several consumer focus 

groups noted that AFS providers are typically open later than 

banks, sometimes even open 24 hours a day. They also noted 

increased convenience among many AFS providers in the 

form of shorter or nonexistent waiting lines for services, as 

compared to their experiences in bank branches.

Consumers and counselors noted the importance of creating 

a friendly, open, and safe environment for consumers seeking 

financial services. One bank opened a branch inside a public 

housing development; customers can cash checks and pay 

bills, including rent, from the branch.

“You can come in to the branch and make your rent 

payment. It’s in a safe environment. The concept 

is, it goes directly to the Housing Authority. People 

don’t have to carry cash. So if you have a [check 

cashing] customer who is cashing their check, they 

can make their rent payment right here. They never 

have to leave the branch with actual cash in their 

hand, or that much cash in their hand, making it 

a little bit safer for them. [We can take] most bill 

payments.”

— Bank Executive

One bank noted that when initiating their suite of services that 

enable non-accountholders to get services such as check 

cashing, they deliberately did not create a separate line or 

section of the bank for these services. The goal was to make 

sure that users of those services did not feel like the bank was 

treating them differently.

“We wanted to have something different so when 

the person is in our line at one of our traditional 

branches to be serviced and standing in line, you 

can’t tell the difference in terms of if it’s a traditional 

bank account or someone that needs [our suite of 

services available to non-accountholders].” 

— Bank Executive
13

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

IV. Bank Strategies to Offer a Range of Products and 

Services 

In addition to building trust and familiarity, banks in the study 

are aware that unbanked, underbanked, and LMI consumers 

have diverse financial needs that may not be well-served by 

traditional bank transaction account products and services. 

These banks offer various financial products and services 

to meet these consumers’ financial services needs. Some 

products and services can serve as gateways for consumers 

to enter the financial mainstream in lieu of using nonbank 

financial service providers, while others help consumers gain 

access to entry-level transaction accounts. Banks undertake some strategies to help consumers with specific needs. 

Second chance accounts, for example, offer consumers an 

opportunity to re-enter the banking system, while small dollar 

loans can help those who need a relatively small amount of 

credit at affordable terms. 

One banker describes his institution’s strategy to serve the 

financial needs of unbanked and underbanked consumers, 

as follows: 

“As part of our research and development strategy 

for this product suite . . . the intent was to meet 

people where they are in their financial journey, and 

be able to help through financial education and 

other resources available, then migrate them and 

hopefully be able to get some of them into more 

traditional banking services over time.”

— Bank Executive

By offering a variety or “suite” of products and services, 

banks build flexibility into their efforts to more effectively meet 

the financial services needs of unbanked and underbanked 

consumers. 

“After reading the FDIC [Unbanked and 

Underbanked Household] survey, we did a survey of 

our own customers and we found that [about onethird] of our own customers were using alternative 

financial services. So not only were there folks 

outside of our bank that weren’t getting access, we 

had our own customers that we had a gap in our 

offering and that’s when we decided to roll out our 

own [suite of financial products and services].”

— Bank Executive

A. Bank Products and Services

Each of the banks included in the study offered a range of 

products and services to meet the needs of unbanked and 

underbanked consumers, though it varied across institutions. 

Some offered a few products tailored to specific markets, 

while others offered a broader suite of products and services. 

Interestingly, smaller banks did not offer a narrower range 

of products and services compared to larger banks that we 

interviewed. Banks approached their product mix differently, but no bank in the study offered only one product. This 

section describes the types of products offered by banks in 

the study.

1. Gateway products and services

A substantial proportion of unbanked households use nonbank financial services instead of mainstream institutions 

to meet their financial needs. According to the 2013 FDIC 

National Survey of Unbanked and Underbanked Households, 

63 percent of unbanked households reported using nonbank 

financial services within the past 12 months and 47 percent 

said they had done so in the past 30 days.7 To more effectively attract unbanked consumers, a number of banks said 

that they offer check cashing, money orders, bill payment, 

and wire transfer services (remittances) as gateway products 

to begin building relationships with unbanked consumers. A 

summary of fees for selected services to non-accountholders 

is shown in Table 1.

7 The 2013 FDIC National Survey of Unbanked and Underbanked Households, October 2014, page 9, available at www.economicinclusion.gov. 
14 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

“Our intent in the beginning was, let’s get these 

unbanked . . . consumers in the door and give them 

a pathway to the financial system so when they’re 

ready and when they choose to, then they can get 

a checking account, they can get a regular savings 

account, they can move on into things like loans, 

and they’ll have access to financial advice and 

guidance and that sort of thing.”

— Bank Executive

Six of the 11 banks interviewed discussed “gateway” financial services they currently provide to non-accountholders. 

As Table 1 shows, check cashing was the most common 

service offered. Fees for this product vary from 1 percent to 3 

percent. Some banks set fees to compete for check cashing 

customers.

“We’ve been comfortable slashing prices to close 

to nothing, to taking 50% off of what the check 

cashers charge, to arbitrarily taking 25 basis points 

off here and there just to see what happens. What 

we found is that our customers are very responsive 

to pricing as far as increasing the volume of people 

coming through the door to cash checks.” 

— Bank Executive

The extent to which banks monitor the number of checkcashing non-accountholders who transition to traditional 

checking accounts varied. Transition rates among banks in 

the study that monitored them ranged from less than 7 percent to 25 percent.

“When we first launched . . . there wasn’t a product 

suite . . . It was really check cashing, followed with 

financial education. We continued to add to the 

. . . product suite . . . Historically, it would probably 

be 10 percent to 15 percent of those who were 

check cashers that would eventually become . . . 

accountholders. [Today, with our newest low-fee 

account in the suite], it’s around a quarter of folks 

that are check cashers that end up becoming 

accountholders . . . which we felt fairly positive 

about.”

— Bank Executive

In addition to check-cashing services, several banks offer bill 

payment and wire transfers to non-accountholders. 

“[Our] check cashing was started some years ago 

and it . . . allows customers, or customers that don’t 

have traditional bank accounts, to cash checks, 

pay bills, send and receive money through [a third 

party] . . . and we also have a reload card option 

that allows customers to be able to load money 

onto a prepaid card. So this product was designed 

with the intent to be able to serve, as you know, 

the unbanked and underbanked community, a large 

population that exists within our core footprint.”

— Bank Executive

To be viewed as an alternative to nonbank providers, one 

bank offers multiple services in one location.

“A lot of times consumers have to go around from 

provider to provider because there’s limitations on 

the checks that they’ll cash or they don’t offer all of 

the services that consumers are looking for, and so 

we felt like that was a big barrier for this customer 

segment. So our goal was to try and offer all the 

services that they were looking for under one roof 

so that they weren’t having to go from place to 

place to try to carry out their financial management. 

. . . As a result, [the bank] launched its suite 

[of products] which includes a prepaid card, 

check cashing services, and [third party] money 

remittance and bill pay.” 

— Bank Executive
15

2. Low- or no-fee transaction accounts 

Slightly more than one-third of the banks interviewed offer 

low- or no-fee transaction accounts. As shown in Table 2, 

none of these accounts allow overdrafts on payments made 

with insufficient funds. One of the banks charges NSF fees, 

while three banks offer accounts that are consistent with the 

core principles of the FDIC Model Safe Accounts template.8

One of the banks interviewed explained how institutions can 

address barriers impeding unbanked consumers from opening bank accounts.

“Number one, it’s removing the ‘gotcha moment’ 

from banking. So, no balance requirements and 

activity requirements [which would result in fees], 

and no overdraft fees. Those instantly blow that 

concern for a consumer out of the water. That 

instantly puts you on sure footing in the mind of the 

consumer . . . [When we launched our checkless 

checking account with these characteristics,] it was 

a pretty big marketing campaign: TV, newspaper, 

Internet, to drive a lot of acquisition . . . We saw 

immediately an actual impact in check-cashing 

volume decrease, because there were so many 

opening up the accounts.” 

— Bank Executive

8 The FDIC Model Safe Accounts template is described in the FDIC Model Safe Accounts Pilot report, available at 

www.fdic.gov/consumers/template/. 

Table 1. Summary of Fees for Selected Services to Non-Accountholders

BANK CHECK CASHING BILL PAY WIRE TRANSFER

BANK 1 

Only for checks from a select list of 

businesses and companies. 

Checks from client companies are 

cashed free; others have a fee of 

3% or $10, whichever is more.

Not offered Not offered

BANK 2 1.86% (min. $2) $1.50

Bank provides services 

through third party, 

which sets its own fees.

BANK 3 1.5%; every 5th payroll or gov’t 

check is free. Not offered Not offered

BANK 4

Own Bank Checks:

$10 or less: no charge

$10.01 or more: 1%

Printed Payroll and Gov’t Checks: 

$1,500 or less: 1.5%

Over $1,500: 2%

Other Bank Checks: 3%

Bank provides services 

through third party, 

which sets its own fees.

Bank provides services 

through third party, 

which sets its own fees.

BANK 5 1% $1

Bank provides services 

through third party, 

which sets its own fees.

BANK 6 US Treasury/Payroll Checks: 2%

Other Checks: 3% Not offered Not offered

Note: Anonymity of banks interviewed in the study is maintained by referring to them as Bank 1, Bank 2, etc. in each table. 

Banks referenced in one table (e.g. Bank 1) are not necessarily the same banks referenced in other tables. 
16 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

Some banks interviewed said that their strategy was to provide low- or no-fee transaction accounts that could appeal to 

a broad range of customers with different income levels. 

“. . . [Name of low- or no-fee checking account], it’s 

a good, solid checking account that cuts across 

all barriers. It was developed to serve our general 

market . . . It’s just a great product that meets the 

need of many different people.” 

— Bank Executive

Another banker said their strategy covers two potential 

markets: 

“ . . . [We] knew this [name of low- or no-fee account] 

was going to resonate well within this unbanked 

community . . . however, a lot of the design and 

intent was also amongst a more affluent target 

segment . . . the number one consideration is fees 

regardless how much money one makes.”

— Bank Executive

Among the interviewed banks that pursued a strategy of 

offering low- or no-fee accounts, the vast majority felt these 

products were successful in engaging unbanked and underbanked consumers. 

“With the [low- or no-fee product], we would say 

that as we’re acquiring new-to-bank clients, [we 

also show them we] have other account options 

that, at times, are better suited for the individual 

and [that they] completely qualify for. And they 

would experience no fees, none of those gotcha 

moments, and would also benefit from additional 

services. That’s always the goal—make sure it’s the 

right fit. I think we’re doing a decent job at that—of 

providing the right fit for individuals that are coming 

in for that specific account . . . And then, for those 

that are opening that account, seeing them grow 

with the bank.”

— Bank Executive

These accounts serve to help bring unbanked and underbanked consumers more fully into the banking system. As 

several banks noted, once consumers become established in 

a basic, entry-level account, it is natural for them to grow into 

more advanced transaction accounts, savings accounts, and 

credit products in time.

Table 2. Features of Low- or No-fee Transaction Accounts 

BANK

MONTHLY 

MAINTENANCE 

FEE

WAIVER OF 

MONTHLY FEE 

WITH DIRECT 

DEPOSIT

USE 

PAPER 

CHECKS

ONLINE 

BILL PAY

OVERDRAFT 

FEE

NSF 

FEE

MINIMUM 

OPENING 

BALANCE

MINIMUM 

MONTHLY 

BALANCE

DEBIT/ 

ATM

BANK 1 $10 Yes No Yes

No,

Cannot

Overdraft

$0 $0 $0 Yes

BANK 2 $0 NA No Yes

No,

Cannot

Overdraft

$0 $10 $0 Yes

BANK 3 $0 NA Yes Yes

No,

Cannot

Overdraft

$25 $100 $0 Yes

BANK 4 $1 Yes No Yes

No,

Cannot

Overdraft

$0 $25 $0 Yes

Note: Anonymity of banks interviewed in the study is maintained by referring to them as Bank 1, Bank 2, etc. in each table. 

Banks referenced in one table (e.g. Bank 1) are not necessarily the same banks referenced in other tables.
17

“I think we have been very pleased with the product 

and how it has such a broad appeal to customers 

across our whole banking system, so it’s been 

very important to them. . . . I think, in large part, 

most customers stay in that account because it’s 

the one that fits them best. Now they may open 

other accounts also—Money Market accounts or 

IRA accounts, or whatever—but we have a broad 

percentage of our customer base in our [low- or 

no-fee account].” 

— Bank Executive

One of the challenges of offering low- and no-fee accounts is 

their profitability. Some banks said that these accounts tend 

to be less profitable than other products they offer. Several 

described the internal discussions they had when the account 

was being considered for the marketplace. These banks 

decided to move forward with the accounts because of the 

potential for establishing longer-term customer relationships.

“‘How are you going to make money off of a product 

that’s not charging fees?’ That was an internal 

decision that we had to make because we thought 

it was going to be the right thing to do. It was going 

to drive consideration in the marketplace, and in the 

end, we would win by winning the full relationship.” 

— Bank Executive

3. Second-chance checking accounts

Two banks that we interviewed offer second-chance checking 

accounts to consumers with negative information (other than 

fraud) in databases used for account screening. Both banks 

said that their second-chance accounts offer customers the 

opportunity to transition to a traditional checking account 

if, after six months, the accounts are found to be in good 

standing. 

One of the banks described periodic reviews of their second-chance checking accounts as an opportunity to determine whether the customer is financially ready to graduate or 

transition to a traditional checking account.

“[Based on the] . . . graduation or migration strategy 

that we currently have to systematically upgrade our 

[second-chance accountholders], we do see about 

a 40 percent success rate of those accounts being 

upgraded. . . . We have a periodic review scheduled 

for them and we look at it at the end of their 6th, 

12th, and 18th [monthly] cycle periods. So they 

have more than one opportunity [to graduate to a 

standard checking account].”

— Bank Executive

These second-chance accounts use paper checks and have 

monthly maintenance fees ($7 for one bank and $10 for the 

other) that cannot be waived. These are not low-fee accounts. 

The primary value of these accounts is to give individuals who 

otherwise would not be able to open an account, an opportunity to re-enter the banking system. 

A few nonprofit organizations said that several banks offer 

consumers an opportunity to open second-chance accounts 

with the stipulation that they enroll or complete an approved 

financial education course. One nonprofit executive described 

a second-chance product that combines low-fee, entry-level 

savings accounts with financial coaching or counseling to 

help consumers re-enter the financial mainstream.

“[For] folks that are blocked because of [being listed 

in databases used for account screening], it’s one 

way to help these folks get accounts. . . . It means 

you have to go to financial counseling before you 

can open the account. . . . I think the financial 

counseling definitely helps. Having a coach or a 

counselor working with a client in the long-term, will 

definitely help them to open the account, manage 

the account, and keep the account open.” 

— Nonprofit Executive
18 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

4. General purpose reloadable (GPR) prepaid cards

More than half of the banks interviewed offer general purpose reloadable (GPR) prepaid cards, another type of low- or 

no-fee transaction account. These GPR cards do not allow 

overdrafts and do not charge NSF fees. As Table 3 shows, 

all of the GPR prepaid cards offered by the banks we interviewed charge a monthly fee, although two banks waive the 

fee under certain circumstances, such as when the customer 

uses direct deposit or makes a minimum deposit each month. 

Fees for loading funds onto a card account vary, and in some 

cases, depend on how the funds are loaded. For example, 

Bank 6 has a $1 load fee and a $9.95 monthly maintenance 

fee. In contrast, Bank 1 has no fee if funds are loaded at its 

branch or at one of its designated ATMs (in this case, a subset of ATMs with certain advanced technologies) and a $5.00 

monthly maintenance fee. None of the prepaid cards offered 

by these particular banks have a minimum monthly balance, 

while three of the six prepaid cards have a minimum opening 

balance requirement.

Banks in the study offer GPR cards pursue one of the following three strategies: (1) the card is offered as the institution’s 

Table 3. Selected Features of Bank-Offered GPR Prepaid Cards

BANK ACQUISITION

FEE 

MONTHLY 

MAINTENANCE 

FEE

WAIVER OF 

MONTHLY FEE 

WITH DIRECT 

DEPOSIT

LOAD FEE

MINIMUM

OPENING 

BALANCE

MINIMUM

MONTHLY 

BALANCE

BANK 1 $0 $5 No

$0 at bank branches, if 

direct deposit, or loaded 

at bank’s designated 

ATMs.1 No bank fee at 

retail locations; retailers 

may charge a fee.

$25 $0

BANK 2 $0 $4.95 No

$0 at branches. 

No bank fee at retail 

locations; retailers may 

charge a fee.

$0 $0

BANK 3 $9.95 $3.50 Yes $0 if ACH credit or 

payroll load $25 $0

BANK 4 $4.95 $3 No $2 at branches (Free 

with direct deposit) $50 $0

BANK 5 

$4

(Free with 

check cashing)

$5

Yes

(with direct 

deposit of $500 

or more/month)

$3 (Free with bank’s 

check cashing service 

or loaded at Bank’s 

designated ATMs).1

BANK 6 $0 $9.95 No $1 $0 $0

Note: Anonymity of banks interviewed in the study is maintained by referring to them as Bank 1, Bank 2, etc. in each table. 

Banks referenced in one table (e.g. Bank 1) are not necessarily the same banks referenced in other tables.

1

GPR prepaid cards can be loaded at a subset of the bank’s ATMs with certain advanced technologies.

SECOND-CHANCE SAVINGS ACCOUNTS

In addition to the two banks that offer second-chance checking accounts, two other banks in the study offer secondchance savings accounts. The purpose of these accounts is similar to that of the checking accounts—to provide access 

to consumers who are ineligible for traditional accounts because of negative information about their financial history (other 

than fraud) that is listed in databases used for account screening. Features of these particular savings accounts include no 

monthly fees, ATM access (no debit function), and low minimum opening balance requirements ($25 or less). 
19

low- or no-fee transaction account option, (2) it is offered to 

consumers listed in databases used for account screening for 

reasons other than fraud as a second chance account, or (3) it 

is one of several transaction products offered to any customer, including unbanked and underbanked consumers. One 

bank executive explained his institution’s strategy of offering 

GPR prepaid cards to check-cashing customers as a gateway 

to the mainstream financial system.

“So they come in, they’ve been cashing checks with 

us, our associates say, especially if they come in 

with a big check, ‘Look, we do have a [GPR prepaid 

card] that you can put this on. It’s safer. It’s more 

secure. If you lose it, it’s replaceable. Instead of 

walking out of the bank with a pocket full of cash, 

you can put it on the plastic and it can really help 

you also manage your funds.’ Because then they 

can access online banking and they can see the 

inflows and outflows, they can build a budget 

and that sort of thing. So they’ve come in and 

cash a check, then we get them to put it onto the 

[prepaid card] progressed now closer— I guess to a 

traditional relationship with us because of the way 

that the prepaid card works. Then I would say from 

there that they move into adding a savings account 

to it and maybe eventually then open up a checking 

account. At this point in time I don’t have the data 

to support that [transition], but it’s anecdotally from 

some of those things that we’ve seen.” 

— Bank Executive

5. Small-dollar loan products 

Several banks that we interviewed offered small-dollar loans, 

which are installment loans that amortize the principal over 

multiple payments. A large proportion of the banks interviewed said that the primary reason their organization offers 

a small-dollar loan product is to provide consumers with an 

alternative to the small-dollar credit offered by nonbank financial services providers. 

“We felt like we needed something for the segment 

of the population on the loans side . . . [this product 

functions as an] alternative to payday loans, as a 

way to start building and repairing their credit.”

— Bank Executive

Several banks suggested that making small-dollar loans available also gave them an opportunity to educate borrowers.

“[Our loan product] is . . . breaking the payday 

lending cycle and . . . it’s a financial literacy 

program . . . And rather than hand them green, pink, 

and blue monopoly money, we felt like using real 

cash in the deal as a way to really make a lesson 

stick and try to see people successfully come to 

the program who really could become future bank 

customers. So the bank—even from a profit and 

loss point-of-view—looked at how to attain new 

successful customers that will be future customers 

of the bank in a normal performing way.” 

— Bank Executive

In addition, these banks said that their small-dollar loan product helps them meet important objectives, such as improving 

the consumers’ general level of familiarity with banks and 

providing a service to the community. 

Loan amounts ranged from a minimum of $500 to a maximum 

of $3,000 (see Table 4). The interest rates charged for loans 

varied from a low of 5 percent APR to a high of 24.99 percent. 

Most of the banks limit the number of loans that a single borrower can take out, although the limits vary.
20 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

To help consumers hone their financial education skills, some 

banks offer financial education or counseling along with their 

small-dollar loan product. One bank, for example, requires 

all borrowers to complete its financial literacy seminar before 

receiving the loan. Another bank encourages borrowers to 

participate in a financial education course offered by a local 

nonprofit consumer counseling agency and offers participants 

who complete the course a $25 prepaid card. While this bank 

does not compel first-time borrowers to complete a financial 

education course, it does require borrowers to do so before 

obtaining a second loan. 

Including a savings component as part of a small-dollar loan 

product is one way to help consumers plan and set up funds 

for future financial needs. Several small-dollar loan products 

offered by banks in the study provide for a portion of the loan 

proceeds to be deposited and held in a savings account or 

certificate of deposit for the loan period. Another product 

includes an optional savings component funded by loan payments in excess of the amount due. For example, 

“Let’s say their payment was $78, we would issue 

a loan ticket or that deposit ticket for $100. First 

they’d come in and we’d get them to open up a 

savings account, get them to open up the loan, tell 

them, ‘Well, here’s your loan payment. This is the 

way the program works. It’s going to deposit this 

amount of money into your savings account. You 

just bring in your [loan] ticket for $100 and go to 

the teller and they drop it off [deposit to savings], 

and . . . the loan [payment] automatically debits the 

saving account,’ leaving them a little bit of reserve 

money in the savings account. Actually, when we 

first started developing that, I was surprised at the 

level of people who actually left money in there. 

. . . A few of them learned that they can just not 

bring their coupon in and make the loan payment 

straight and bypass savings, but still none of it was 

mandatory.”

— Bank Executive

Table 4. Summary of Banks’ Small-Dollar Loan Products 

BANK

LOAN 

AMOUNT

LOAN TERM

INTEREST 

RATE

(APR)

LIMIT ON NUMBER OF 

LOANS FOR A SINGLE 

BORROWER

FINANCIAL 

EDUCATION OR 

COUNSELING 

REQUIREMENT

BANK 1 

No minimum 

or maximum; 

typically $500

12 months 

or less

6.24% to 16.24% 

(based on credit 

score)

None No

BANK 2 $500-$1,000 12 or 24 

months 5% Customer limit of 4 loans Yes

BANK 3 $500-$1,500 6-12 months 16%

Max of 3 loans per year. Loan 

proceeds may not be used to 

pay off an outstanding loan.

No

BANK 4 $1,000-$3,000 1 year 24.99% Customer limit of 2 loans No

BANK 5 $500-$2,000 12-24 months 10%

Max of 3 outstanding loans at 

any given time. Borrowers can 

only get a second loan once 

they have paid out at least 50% 

of the first loan.

If they pay off three loans, 

customers can move into a 

traditional loan.

Yes

Note: Anonymity of banks interviewed in the study is maintained by referring to them as Bank 1, Bank 2, etc. in each table. 

Banks referenced in one table (e.g. Bank 1) are not necessarily the same banks referenced in other tables.
21

CREDIT BUILDER LOANS

Many of the small-dollar loan products in the study were designed as alternatives to payday loans. However, numerous 

banks also said that their small-dollar loan product provides borrowers an opportunity to build or rebuild their credit history. With one product, for example, borrowers obtain a loan of up to $2,500 but do not actually receive access to those 

funds. Rather, the borrower makes loan payments that are deposited into an interest-bearing savings account at the 

bank. Borrowers who make timely loan payments benefit from improving their credit score. In addition, once the loan 

is paid off, (in one to five years), the borrower has built savings that equal the loan value plus interest.

The extent to which consumer counselors are aware of banks 

in their local communities that offer small-dollar loans varied. 

“I’ve referred a lady to [the local bank]. She had a 

payday loan that was pretty outrageous. She went 

to the [bank] and got a small-dollar loan to pay off 

the payday loan. It was a positive, good experience 

for her. . . . [Consumers] are really just not aware of 

it [small-dollar loans]. The banks are the only reason 

I started doing this. And for most of the people that 

have gone to the banks that we’re working with, 

they find out about it from word-of-mouth from 

somebody else that’s gotten one. It’s not like they’re 

promoted at all.”

— Consumer Counselor

Following is one consumer’s reflection on his experience 

obtaining a small-dollar loan. 

“It was good experience, I’ve got to admit. I’m happy 

. . . if I get a loan from a bank, they might give me 

12, 24 months. And like I said, interest rate is low.” 

— Consumer

B. Communicating Relevance of Bank Products and 

Services in Consumers’ Financial Lives

Banks that we interviewed said that it is not enough to simply 

create a range of products and services for the unbanked 

and underbanked. It is also essential to have a marketing and 

communications strategy that ensures that unbanked and 

underbanked consumers are aware of these offerings. Several 

banks described using consumer market research to deepen 

their understanding of how best to communicate with and 

market to these consumer groups.

“Last year, we did a focus group and we paid a research firm to go out and find customers that were 

our customer choosing traditional bank services, 

our check-cashing services, and also nonbank 

customers. . . . Through the research we found that 

many of the customers using check cashers today 

have been doing so because it was a generational 

view for them. They recalled stories of standing 

in lines of local check cashers with their parents 

as kids. That was their view of banking, the place 

to get your financial needs taken care of. And so 

we knew, . . . there was a real opportunity for us 

to continue to look for ways—through community 

partnerships and the messaging and content that 

goes out to this particular customer segment—

to make sure that they know that they’re welcome 

into our [bank’s] doors and that what we have available does not require them to have a bank account 

with us.”

— Bank Executive

Many banks said that they were more effective in communicating with unbanked and underbanked consumers when 

they collaborated with local community organizations that had 

ongoing relationships with these consumers. These partners 

were particularly useful in helping banks better understand 

cultural and social sensitivities of unbanked and underbanked 

consumers in their local markets. Several banks discussed 

working with local nonprofit organizations to reach out to the 
22 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

unbanked to market their check-cashing services with the 

intention of attracting these consumers to their branches and 

helping them feel more comfortable with their institutions. 

Once a relationship was established, the banks continued to 

communicate and educate these consumers about their other 

products and services through branch tellers and customer 

service representatives.

“I think the overall marketing strategy is to make 

sure everyone knows that they have an option 

available to them regardless of where they are 

in their financial journey. An unbanked person 

can come into a branch and start with checkcashing services. They leave being able to get their 

business done. That client will be more inclined to 

come back and do business with us, and then once 

they’re on a better footing can grow into different 

products.” 

— Bank Executive

Several banks also underscored the value of direct conversations with customers that allow banks to understand customer needs and introduce them to appropriate products to meet 

those needs.

“. . . [W]e will continue to have conversations with 

customers about what is available to them so that 

they know that if they want something, they can get 

it. We also have a couple of savings-secured type 

loan products. We have a line of credit and a loan, 

and we have conversations with them about that. 

[We] know that if they have a savings account, they 

might be eligible to get a line of credit or to get the 

loan for those liquidity needs that they might have— 

meaning short-term, small dollar-type liquidity 

needs. So we do continue to talk to them, give 

advice and guidance . . .”

— Bank Executive

“You have to make it personal. You have to take 

what they’re doing, talk to them then show them 

what they could do with it. When you make it 

personal they understand. When you sit and give 

them ‘theoreticals’, they don’t listen . . . Most of the 

staff will use a computer and sometimes they pull 

up . . . loan calculators out there showing them how 

much all that stuff adds up over a year. If you talk 

to them, you could find out what are their interest 

[costs], and then it’s easy to show them what else 

they could be doing [with their money].”

— Bank Executive

One bank described the benefits to the institution and value 

to the customer of proactively reaching out and calling accountholders on the phone and having conversations about 

their banking needs and customer service experience.

“. . . [T]here is a lot of attention being paid now with 

calling, having conversations [with] customers. 

Again, maintaining the line of communication. You 

can almost always assure yourself of circumventing 

problems, and so branch managers [make calls to] 

a list of customers they’re looking to reach out and 

talk to. You know, ‘Are we meeting your needs? 

Are there any other services that we could offer 

that might benefit you?’ So those are some of the 

efforts that are made to maintain the client base 

that we have.”

— Bank Executive

One consumer counselor’s observation reinforced the 

appeal of speaking directly to a “live” customer service 

representative.

“I think clients might be more inclined to call the 

bank to discuss when they’re having problems 

rather than just walk away and close the account if 

it was easier to get in touch with a real person. Like 

if they actually have [the business] card of an actual 

human at their bank branch where they opened the 

account and didn’t have to go through this system 

of pressing buttons and waiting. I just think that’s 
23

simple. Like if you knew you could call and have 

someone pick up the phone and talk to you, then 

you might be more likely to try to work out the 

problem rather than just walk away.”

— Consumer Counselor

Banks said that through market research and collaborations 

with local community-based organizations, they gained a 

better understanding about communicating with unbanked 

and underbanked populations in their market, while nonprofit 

organizations, consumer counselors and consumers described 

additional, potentially effective methods for banks to communicate with consumers. 

C. Consumer and Consumer Counselor Perspectives on 

Marketing Efforts

A number of banks interviewed described how they strategically market their products and services to meet the needs of 

unbanked and underbanked households, yet many consumers said that they are unaware of bank products and services 

that either provide alternatives to using nonbank providers or 

are low- or no-fee transaction and savings accounts.

Consumers and counselors said that bank marketing messages need to be clear and that the features and fees for their 

various products and services need to be transparent. 

“More clarity I think, just clear-cut communication, 

clear language around the account. I don’t know if 

that’s a feature, per se, but some sort of marketing 

initiative that makes it super clear to understand exactly what you need to do to maintain the account. 

I think we could help them.”

— Consumer Counselor

A number of counselors and consumers suggested that 

banks create tools (e.g., budget spreadsheets and product 

brochures) that bank staff can use to educate consumers 

about the features and fees of various products and services. 

Using these tools could generate richer conversations that 

may ultimately help consumers make more informed decisions about their financial circumstances. One counselor 

described how a bank could help a consumer compare the 

costs of having a bank account with using check cashing 

services.

“You can lay out the fees of the bank and the fees 

of the check casher and say, ‘Here is what you 

are going to pay if you don’t use check cashers, 

and this is what you going to pay the bank, and 

this is sort of like the difference.’ That will help in 

visualizing and see how expensive it is to use check 

cashing.” 

— Consumer Counselor

Consumers benefit from obtaining simple, easy-to-understand language about credit products, while banks gain from 

offering credit products to knowledgeable borrowers who are 

more likely to accept loan terms that they understand.

“When you go to [get] a payday loan, you know 

for this dollar amount, it’s gonna cost this. It’s 

almost like they put it on the table, so it’s real 

easy to comprehend. Whereas, you don’t really 

know—the bank seems like a giant, and they really 

don’t know how to comprehend what’s going to 

happen, how interest will compound. . . . The bank 

may feel a little bit intimidating to them, because 

they don’t know how things are happening. You 

get statements and letters . . . some of the people 

that I deal with, they don’t really read well. . . . 

Because if [a bank] gave them a whole statement 

of information about what would happen with their 

money and the advantages in there, they couldn’t 

break it down and comprehend. But they can 

comprehend [from a payday lender] that if you 

borrow $100, you’re gonna pay $125 back.” 

— Consumer Counselor
24 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

Bank products and services, and thoughtful marketing strategies are essential components of broader bank efforts to 

develop relationships with unbanked, underbanked, and LMI 

consumers. Attracting consumers to banks and convincing 

them that bank products and services are often cheaper and 

offer better long-term benefits than those offered by nonbank 

financial service providers is the first step toward building 

these relationships. Maintaining these relationships over time 

is another crucial component of bank efforts to serve unbanked and underbanked consumers.
25

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

V. Bank Strategies to Help Sustain Banking Relationships 

with Consumers

Banks can strengthen their relationships with customers and 

potential customers through efforts beyond the provision of 

specific banking products and services. Study participants 

described institutional efforts to support the bank’s investments in products and strategies for unbanked, underbanked, 

and LMI consumers. Highlighted strategies include staff 

training, development, and retention, which ensure that consumers encounter bank personnel knowledgeable about their 

institution’s products and services; and technology tools that 

help consumers open and manage accounts.

A. Enhancing Staff Training, Development, and Retention

Several banks and consumer counselors noted the importance of hiring, training, and retaining staff to better communicate and to build and maintain relationships with consumers 

and partners. 

Describing their experience with a tax-time savings product, 

one consumer counselor explained,

“I think the relationship is key. We work with two 

[branches of the same bank], one in [town A] and 

one in [town B]. Since I’ve been in [town A], I’ve 

been with the same personal banker. Her name is 

Flora. I have clients who opened their account with 

us from our program in 2013, and they still have 

that account. . . . And they’ll be like, ‘Oh yeah, I 

went to the bank, and I saw Flora.’ In [town B], the 

minute their first year is done, they close [their] 

account and they’re done. They’re done with the 

program. I’ve worked with three personal bankers, 

and like three or four branch managers. [The client 

doesn’t] know who to go to in case they have a 

question. So it’s very noticeable that in [town B], 

literally, a year the program ends, they lose their 

account, and they’re done. In [town A], people stay 

with the program for the three years that they can.” 

— Consumer Counselor

Banks and consumer counselors explained the importance of 

making sure branch staff are familiar with the bank’s products 

and services, including gateway products and services, lowor no-fee transaction and savings accounts, the features and 

fees of each, and how these compare to nonbank alternatives. 

“We’ve . . . had to invest heavily in training [for our 

on-line account opening tool]. Because you want 

to make the process as smooth as possible and 

as transparent as possible, but that relies heavily 

on making sure that our partners, and frankly our 

colleagues in the branches, understand what the 

processes are and are clear about the needs of the 

consumer.”

— Bank Executive

Counselors suggested that branch staff have an appreciation 

for the cultural and social background of consumers as well 

as language skills needed to communicate with members of 

the community. 

B. Developing Internet and Mobile Tools to Streamline 

Opening and Managing Accounts

Consumers suggested that banks could develop and use 

tools to monitor and update consumers about their accounts.9

“. . . At [my bank], they send me a text or [email] 

saying, ‘Your balance, for example, is less than 

$50.’ And they let you know ahead of time. That 

way one realizes that they may overdraw.”

— Consumer

One exchange between two focus group participants underscored the fact that consumers have come to expect more 

efficient communication from banks, through text alerts for 

example, but not all banks offer this type of service.

9 The FDIC, in a separate study, conducted qualitative research to better understand the ways in which mobile financial services (MFS) can help increase the 

participation of unbanked and underbanked consumers in the financial mainstream. In this study, some consumers reported that MFS alerts and monitoring 

tools have helped them reduce fees, better track their finances, and improve on-the-spot decision-making. See “Opportunities for Mobile Financial Services 

to Engage Underserved Consumers: Qualitative Research Findings”, May 2016, available at www.fdic.gov/consumers/ccommunity/mobile/.
26 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

“[With cell phone companies, if] you’re over a certain 

amount of data, 75 percent, they’ll actually send 

you a text, ‘Hey, you know what? You are using 75 

percent of your data. For an extra $10 a month [you 

can increase your data allowance.’ Banks could do] 

things like that.”

“Well, [my bank texts] me, ‘You’re below a certain 

amount.’ So I know, OK?” 

— Consumers

In addition, consumers and counselors said that additional 

opportunities exist to leverage technology to create mobileand Web-driven tools that can help customers manage and 

maintain their accounts. For example, several consumers 

suggested that banks offer an early warning through text 

alerts, emails, or phone calls when accounts are about to be 

closed by the bank. One consumer said that she wished her 

bank had given her a warning or not let her make a purchase 

before they closed her account. Another said that he received “no notification” that his account was being closed for 

non-activity. 

Using technology to provide consumers with alerts about 

account fees, low balances, and possible account closure are 

cost effective ways to help them manage and maintain their 

accounts. 

“They eat your money up if you don’t pay attention. 

. . . I think I had $99 in there and I didn’t know, and 

each month it ate it up [with fees] until it was zero. 

Then they sent me a letter saying [the account has 

a negative balance]. I said, ‘Why didn’t you let me 

know? I’m a member. Why didn’t you say, ‘Hey, it’s 

in danger?’ And I just gave them that $100. It was 

gone. . . . I switched banks.” 

— Consumer

Nonetheless, consumer counselors tend to agree that using 

“basic” technology remains an important communications 

tool for banks to use. 

“Pick up the phone. I mean, have a conversation. 

You don’t know [your account is going to be closed] 

until after it happens. Many of our clients . . . are 

transient. They don’t get a lot of these notices until 

it’s too late, and then they’ll get this thing with this 

negative number because they put that same check 

through 47 times and there’s still no money in the 

account. Then, it becomes hopeless.”

— Consumer Counselor
27

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

VI. Bank Strategies to Ensure Business Objectives Are Met

Organizations, including banks, create strategies to meet their 

business objectives and achieve goals. One goal of banks in 

this study was to engage unbanked and underbanked populations and to encourage their participation in the financial 

mainstream. Numerous participants shared their perspectives 

about challenges they encountered when pursuing this goal 

and lessons learned that should smooth the process going 

forward. 

Three main themes evolved from these discussions with bank 

executives and other participants:

• taking steps to help ensure that their institution’s strategy and long-term commitment to developing relationships and encouraging mainstream participation by the 

unbanked and underbanked are clearly understood and 

supported by management and staff at all levels of the 

organization. 

• assessing and resolving implementation issues for strategies in support of efforts to better serve the unbanked 

and underbanked populations. 

• making institutional investments in technology, staffing, 

and training that support efforts to engage these consumers and encourage their participation in the banking 

system. 

A. Internally Communicating the Institution’s Commitment 

to Serving the Unbanked and Underbanked

Numerous banks discussed the importance to their organization of educating bank personnel about the institution’s 

strategy and long-term commitment to engaging unbanked 

and underbanked consumers. This includes educating staff 

at all levels about the value proposition of offering products 

and services needed by these consumers, such as low- or 

no-fee transaction accounts. Through education, staff can 

better communicate and build long-lasting relationships with 

unbanked and underbanked consumers. 

“We’ve had extensive training with our associates. 

The first part has been a big cultural shift is the 

fact that we’ll offer any of these services, and you 

don’t have to have a deposit account with us. So 

whenever someone says, ‘Oh, you’ll cash checks 

for non-customers?’ I’m like, ‘No, we don’t. You 

can come in, enroll in [our check-cashing program], 

and we’ll cash a check for you. You’re a customer 

at that point.’ So it’s that mindset of, you don’t have 

to have a deposit account with us to be considered 

a customer. We really have to drill that into our 

associates . . . and then training to say what the 

benefits are not only to the customer, but to the 

bank. So our associates need to understand both 

sides of that so that they understand how to sell it 

or how to find what would more fit the customer’s 

needs, and I’ll give an example of this. 

We had a customer that was coming in and 

buying several money orders every month, and the 

associate started looking at what the money orders 

were for and talking to the customer about it. That 

associate then looked up the billers on [a third 

party] bill pay and said, “You could pay all these 

right here. You don’t have to run around with the 

money orders going from business to business.” 

And the customer was like, ‘You’re kidding. That’s 

great. You just saved me gas money and time and 

everything else.’ So as long as our associates 

understand what the benefits are both ways and 

how they can progress that conversation, it starts to 

come to them intuitively.”

— Bank Executive

Banks, as well as nonprofit organizations, spoke about the 

importance of banks making a commitment to the community 

to engage unbanked and underbanked consumers by hiring 

local residents who have a social and cultural understanding 

of the community. These staff are considered vital to helping 
28 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

the institution reinforce its commitment to building long-lasting relationships with these consumers. 

 “We have tellers who are from the community. 

We’ve got customer service reps who are from the 

community. They all understand that the bank has 

a mission to encourage this behavior without being 

paternalistic about it.”

— Bank Executive

Several bank executives described the importance of educating staff at all levels on the value proposition of offering 

products and services that are especially needed among unbanked and underbanked consumers, such as low- or no-fee 

transaction accounts and small-dollar loans. 

“You talk about barriers. . . . Probably the biggest 

barrier we had was internal, in that we’ve have 

lenders that have learned and are good at lending, 

have been doing it for 20-25-30 years, and when 

we start talking about loans to people, in many 

cases with very poor credit scores or no credit 

at all, they just looked at us like we were crazy. 

[They said,] ‘That’s not the way you do that. We 

don’t make money like that.’ So it took a little bit of 

convincing for a lot of people, particularly the older 

bankers that we have, but in many cases those 

people were part of the programs, they were part of 

the training—the financial training part. And as they 

took part in it and made some loans, and saw the 

tremendous benefit that was being provided to the 

folks that were going through the classes—they, in 

many cases, have become the biggest supporters 

of the program now.”

— Bank Executive

Nonprofit partners spoke about their experiences working 

directly with consumers and the importance of understanding 

the local community’s history and culture. They described 

helping banks by providing cultural and sensitivity training to 

bank staff. 

“We provide training for our bank partners, which 

include the [Customer Service Representatives] in 

all of the branches who need to understand that 

this is a population that is not used to interacting 

with bank personnel. They are not used to jargon, 

so if you start talking ‘NSF’ and ‘OD’ and all these 

other things, they have no clue what you’re talking 

about. So we try to educate our partners as to ways 

in which to best approach these potential people 

opening accounts.”

— Nonprofit Executive

Several consumer counselors emphasized that banks must 

align their IT infrastructure and back office functions with their 

programmatic efforts to avoid implementation challenges. 

“Our organization offers a no-service-fee account 

in partnership with a bank. . . . It’s supposed to 

be no service fees, but when [our clients] go, we 

send quite a lot of volume during tax time to get 

these bank accounts made. They flood the banking 

center, they flood the banks and there’s only two 

bankers working. So they don’t get the attention 

that is needed [from] the bankers, because they’re 

not getting any commission from these accounts 

. . . So it’s pretty much the CRA requirements that 

each bank has. So [the program] really get no 

attention, [the bankers are] supposed to get trained 

on what our program exactly is. But the training 

only happens once, and there’s a lot of turnover at 

the bank. . . . Something gets lost in the back office 

on the back end of things . . . where there’s no label 

that this is no service [fee] account. So people are 

getting charged service fees . . . they go to the bank 

and they’re like, ‘Why are you charging me service 

fees? They told me that this wouldn’t be on it.’ And 

they say, “I don’t know what you’re talking about.”

— Consumer Counselor
29

A few nonprofit executives and counselors recommended that 

banks create a program leadership structure that allows for a 

seamless transition to new leadership if staff changes occur. 

“I just need a lot more responsiveness from 

whoever is doing the account linking, the account 

maintenance, making sure that [I can view all the 

accounts active under our program]. . . . I think [it’s] 

turnover on the bank’s end, in terms of employees 

. . . I’ve been emailing one guy for about four or 

five months with no reply. And so, I think the guy 

might have left and my point of contact might have 

changed, so nobody tells me who it is . . . and so 

at a conference call, I’ll be told that somebody’s 

going to email me with a list of accounts, and then 

somebody—a different department—emails me a 

list. And then, another time last week, they asked 

‘me’ for the list. [I said] ‘I don’t provide you with that 

list, you provide me with that list.’”

— Consumer Counselor

B. Assessing and Resolving Implementation Challenges

Several banks said they adjusted their unbanked and underbanked strategy during the implementation phase of a 

product initiative to better meet consumer needs and expectations. For example, one bank executive described how they 

assessed and adjusted their strategy to competitively offer 

small-dollar loans as an alternative to payday lenders. 

“At the end of the day, the consumer who uses a 

payday loan needs access to small-dollar credit, 

and in order to win their business, we had to have 

simply a better, faster, cheaper product. We had 

to be more accessible, more convenient, easier to 

understand, and at a better price point, and we’ve 

really hit all four of those. To give you an example, 

we found out we’re meeting—we’re exceeding 

customer expectations in terms of the turnaround 

time for approval. So, if you sit in a payday loan 

office, it’s going to take 10 to 20 minutes to get 

your loan approved. Now we’re doing it in 5.”

— Bank Executive

Another bank executive discussed some of the experimentation they did to develop their strategy for offering products 

and services to unbanked and underbanked consumers.

“As a bank, in looking at the universe of unbanked 

and underbanked, we had tried many experiments 

in the past locally, and I’ll just highlight a few, . . . for 

example, we bought a check cashing store, brought 

it into the lobby, cut the fees in half, and then encouraged people to open up checking and savings. 

. . . I think, in looking at this strategy, a couple of 

learnings. [W]e pulled out of our check cashing 

experience . . . one [lesson] is the bank is not necessarily the trusted source. In most cases, it’s the 

last place people are going to go. So as a banker, 

you do have to get over your ego, and it took us 

awhile to understand that people would rather go 

to a check cashier than a bank, most every day 

of the week. So, for us it was figuring out who do 

we partner with, who are the trusted sources, and 

where do the unbanked and underbanked hang out 

in mass, in scale?”

— Bank Executive

Similarly, another banker shared the steps his institution took 

to assess and resolve issues related to their product strategy 

for specific communities in their market area. 

“We recognized that our footprint . . . covered 

territories and communities where the products 

that . . . we were focused on selling were products 

that did not resonate. So investment accounts, 

mortgages . . . these were some of the products 

that there was not high demand for in some of 

these areas. So instead, looking at the population 

that we were serving within some of these 

communities, we looked at what is of need. And so, 

check cashing was one of the highlighted services 

that came to bear, and we felt [this product] was a 

way of being able to introduce a large segment of 

the population that was around our branches within 

certain communities to our bank, and to provide 

them services that resonated that they would use.”

— Bank Executive
30 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

When addressing collaborative efforts, several nonprofit executives discussed some of the issues that can arise, such as 

incomplete communications, lack of execution, or ineffective 

follow-through on commitments.

“. . . [A]ll of the financial institutions had been vetted 

and were committing to make free and low cost 

accounts available. . . . But the banks themselves 

weren’t necessarily training their staff on those 

accounts. Some of the banks were only having 

people open those low cost, no-fee accounts at 

certain branches. It was really difficult. I mean 

really, really difficult to get people [in] with those 

accounts.”

— Nonprofit Executive

Comments from numerous consumer counselors engaged 

in efforts with banks further underscored the importance of 

exchanging timely feedback, assessing collaborative efforts, 

and implementing changes, as needed, to increase effectiveness and achieve scale.

“Here’s the reality. I worked [on a partnership 

program with a bank] helping clients, and one client 

into a special saving [product]. This is a six-month, 

fixed period account. At the end of that six months, 

you will get matching [funds]. So, here comes our 

client [who reaches] the six month period. The 

bank just [told] him to close the account. They’re 

not really encourag[ing] the client to keep that type 

of account, because although as per the [program 

rules] you will still enjoy a one year free of charge, 

they just tell them to close it. Close it. So they just 

want to get rid of this kind of account.”

— Consumer Counselor

Failure to resolve implementation challenges can have an 

unintended ripple effect. It can lower consumer participation, 

damage the reputation of the bank and community partners, 

and erode consumer trust. Several counselors expressed 

these types of concerns. 

“A lot of the failure really comes down to the 

organization. We’re the ones representing them as 

our program. It’s hard too, because we’re going to 

run this all again and try to get things ironed out, 

but it’s really hard to promote my own program 

because I don’t have the support of the bank. So I 

can’t tell my clients, ‘Hey, this year, No problems.’ 

I don’t even trust that there’s not going to be any 

problems.”

— Consumer Counselor

C. Investing in Technology, Staffing, and Training 

Many banks view technology as an effective tool for achieving strategic goals aimed at engaging unbanked and underbanked consumers. Several banks in the study said they had 

invested in innovative platform development that streamlines 

the account opening and monitoring processes. Often, these 

technological investments are shared with nonprofit partners 

to leverage resources and gain scale in participation. For example, one of the banks in the study created customized online portals for their nonprofit partners to broaden the number 

of channels available for opening bank accounts for clients. 

“. . . It is inevitably about how you build out a 

platform that allows the nonprofit to present a 

solution, in this case, a savings account for clients 

that has an ATM card. It’s a full savings account, 

no different than you or I would receive basically 

from the bank. . . . Then if you’re going to have the 

nonprofit provide financial capability and coaching, 

and building of a [financial] history for people that 

the nonprofit is so committed to, then the nonprofit 

can see the balance of all these accounts . . . 

they’re able to actually see across the behavior, 

the patterns, the history of their clients in terms of 

savings just as they can on credit. I think bringing 

a technology that allows them to do that has given 

them the ability also to understand the behavior
31

and the needs of their clients and to think about the 

services that they require. . . . Now we’re embarking 

on a big technology upgrade for the nonprofit so 

more of their payments and receivables of funds can 

be done digitally or transacted by mobile. . . . We’re 

also increasing the ability to do remote openings of 

accounts.”

— Bank Executive

Banks that had invested in new technology said that they 

provided training to branch staff. When applicable, they also 

trained their nonprofit partner staff, who could then use the 

technology for unbanked and underbanked clients.

“[Our] bank partner provided us with an online 

platform that allows us to open and monitor an 

account anywhere that has Wi-Fi connection. 

Our staff has been trained on how to use this 

online portal for opening accounts, which is pretty 

amazing as well, because now our clients bring their 

documents. We have established that trust with the 

client and are able to open the account on behalf 

of the bank. Once we open the account, we give 

the account number to the client and they go to the 

bank branch to make their initial deposit.”

— Nonprofit Executive

“Things like language barriers, cultural competency, general distrust and frankly dislike of banks, a 

misconception of the kinds of documentation that 

you need to open an account, all of these can be 

circumvented and dealt with, addressed with directly when you have a simple and transparent product 

but then more importantly pairing it up with a community intermediary that can provide the assurance, 

the advice, the coaching in [appropriate] language 

and employing cultural competency. So then at the 

end of the day the consumer of the [intermediary] 

client can make a much more informed decision 

about whether he or she wants to take on accounts 

to begin to build a financial identity.”

— Bank Executive
Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

32 

VII. Major Implications of the Study

This qualitative study examines the strategies and products 

banks have developed to address the financial needs of 

unbanked and underbanked consumers. It also draws from 

the perspectives of consumers, nonprofit organizations, and 

consumer counselors to better understand how unbanked 

and underbanked consumers perceive bank and nonbank 

financial service providers, their products, and their strategies 

in bringing these products to market. Amassing these different experiences and perspectives expands our understanding 

of the marketplace where banks and unbanked and underbanked consumers meet. 

The study intentionally reached out to executives at banks 

that have a reputation for leadership in serving unbanked, 

underbanked, and LMI consumers. Not surprisingly then, 

bank executives we spoke with reported that they provide a 

range of strategies and products that seem to meet the expectations of consumers and counselors that we interviewed. 

Similarly, bank executives indicated an understanding of the 

importance of providing services in accessible locations with 

welcoming, knowledgeable staff. 

In contrast, our conversations with consumers and counselors paint a picture of a consumer marketplace where banks 

are often perceived as untrustworthy and unresponsive to 

consumer needs. While the consumers and counselors that 

we spoke with were not typically customers of the banks 

included in the study, their perceptions suggest continuing 

challenges. However, we remain optimistic about this seemingly contradictory set of conversations. Indeed, it is encouraging that significant overlap exists between the products and 

services that unbanked and underbanked consumers want 

and the strategies that they want banks to pursue, and the 

efforts that banks are pursuing.

The findings from this research indicate that promising opportunities exist for banks considering developing longer-term 

sustainable relationships with unbanked and underbanked 

consumers. We draw five major implications from the findings 

of this broad-based qualitative analysis that banks and other 

stakeholders can use to enhance their efforts to serve these 

consumers. 

1. Recognize that Trust Is the Foundation for Strong 

Relationships with Unbanked and Underbanked 

Consumers 

Lack of trust comes in multiple forms and stems from numerous causes. Unbanked and underbanked consumers may not 

trust banks because of their own past negative experiences 

or based on experiences of their friends, neighbors, and family members. Some personnel at nonprofit organizations have 

questioned the reliability of their bank partners, often because 

bank personnel do not follow through on commitments (e.g., 

not showing up at an event) or because staff depart the bank 

or change positions without suitable replacements. Adopting 

strategies to build or increase unbanked and LMI consumers’ trust in banks is a necessary first step to increasing their 

participation in the mainstream financial system. Similarly, 

maintaining and strengthening long-term partnerships with 

nonprofit organizations that serve the residents of LMI communities is an advantageous strategy for banks, nonprofits, 

and consumers.

2. Adopt a Multi-Pronged Approach to Serving LMI 

Consumers 

In addition to the need to build trust, banks, counselors and 

consumers cited a wide range of additional challenges that 

may hinder unbanked and LMI consumers from opening and 

retaining bank accounts. These challenges include consumers’ unfamiliarity with banks and bank products and services 

and their perceptions that banks do not offer products that 

meet their financial services needs and are not welcoming or 

interested in serving them. 

Banks seem to be most successful when they simultaneously 

implement multiple approaches to address the many salient 

challenges that the unbanked and underbanked populations 

face. These approaches include implementing strategies to 

build trust and familiarity, offering a range of relevant products and services, establishing accessible branches with a 

welcoming environment, hiring and training bank staff to serve 

these consumers, and engaging in strategic partnerships with 

local nonprofit organizations and local government agencies 

to deliver products and services and establish relationships 

within the LMI community. 
33

3. Nurture Longer-Term Relationships with Community 

Partners 

Bank partnerships with nonprofit organizations and local 

government agencies are key components in bank efforts to 

serve unbanked, underbanked, and LMI consumers. This is 

a “tried and true” strategy that, when executed well, benefits 

banks, their community partners, and consumers. 

Nonprofit organizations and local government agencies 

with strong track records supporting LMI communities can 

facilitate stronger relationships between banks and residents of these communities, ultimately benefiting banks and 

consumers. Banks can provide needed financial and knowledge-based resources to help local organizations pursue 

their goals. To be most effective, however, these partnerships 

require a deeper level of engagement from banks and their 

partners towards nurturing a healthy relationship. Crucially, 

the relationship will benefit from banks and their partners 

maintaining communication to ensure that all parties share 

common, or at least complementary, goals, and that these 

goals are being addressed. This sort of relationship requires 

more active participation by personnel at higher levels of 

both banks and their partners, and a greater commitment of 

resources than a less engaged relationship. 

In this study, banks and their partners sometimes expressed 

different perspectives on the effectiveness of their partnerships and related bank efforts for serving unbanked and 

underbanked consumers. While one bank touted the success of an initiative designed to open bank accounts for LMI 

consumers, their nonprofit partner considered the number of 

accounts opened to be low. Alternatively, we heard conflicting 

reports about the value of a bank-nonprofit partnership. The 

bank said that it highly valued the partnership, while representatives from the nonprofit said that their organization was not 

meaningfully engaged. Ideally, partners should build into their 

initiatives a process for regular check-ins, and, essentially, a 

process for adapting their implementation to ensure that all 

partners’ goals are being addressed. This is a commitment to 

the program to keep the effort on track and more effectively use resources in the delivery of products and services to 

unbanked and underbanked consumers. 

Better communication about shared goals and metrics 

between banks and their partners is likely to lead to greater 

successes for all participants. Periodic assessments with 

partners should help banks gain a richer perspective on the 

overall effectiveness of bank efforts to engage unbanked and 

underbanked consumers and facilitate continual improvements in their relationships with nonprofit organizations and 

local government agencies.

4. Use Technology to Increase Efficiencies for the Bank, 

Its Partners, and Its Customers 

From using text alerts and communicating timely account 

information to consumers, to using Web portals to enable 

bank partners and their clients to open consumer accounts 

remotely, this research demonstrated that technology tools 

can help banks and their partners better serve unbanked and 

underbanked consumers. In addition to the specific efficiencies created by these tools, technology is a crucial battleground on which the competition between bank and nonbank 

financial services providers takes place. 

We consistently heard from consumers and counselors that 

LMI consumers will use the financial services that are most 

convenient to them. For various reasons, banks likely will be 

challenged to compete with nonbank providers with regard 

to physical locations (bank branches versus check cashers 

and payday lender storefronts, for example), but banks can 

use technology strategically to help mitigate this situation. 

For example, banks are offering technologies, such as remote 

deposit capture where deposits can be made from anywhere 

at any time, that can increase convenience for consumers and 

possibly lower branch operating costs. Added convenience 

can be a way to reduce the costs associated with using bank 

services and better attract more unbanked and underbanked 

consumers and retain them as customers. 

5. Develop an Understanding of Unbanked and 

Underbanked Consumers in the Bank’s Market Area 

Unbanked and underbanked consumers have wide-ranging 

perceptions about banks and their products and services, 

which are related to the diversity within these consumer 

groups. This diversity comes in many forms, including demographic diversity and diversity of experience with financial 

services.

Nearly half of unbanked consumers were once banked.10

Some ended their banking relationships following the decision that banks would not be their most appropriate financial 

service provider at that point in their lives. Indeed, the most 

10 2013 FDIC National Survey of Unbanked and Underbanked Households, October 2014, page 18, available at www.economicinclusion.gov.
34 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

common reason previously banked consumers cite for being 

unbanked is that they feel that they do not have enough 

money to keep in an account or meet a minimum balance.11

Others closed their bank accounts following a negative experience with their bank. A third group may have had their bank 

accounts closed involuntarily, the result of a determination 

by the bank not to continue their relationship with these 

consumers. 

Clearly the individual experiences of these consumers would 

shed more light on the complicated landscape of unbanked 

consumers. However, the overarching point is that unbanked 

consumers are a diverse group, and banks seeking to serve 

these consumers will benefit from understanding their situations beyond simply their unbanked status. Products and 

strategies that will attract the interest of a consumer who is 

unbanked because she thinks she does not have enough 

money for a bank account will likely be different from those 

that will attract the interest of a recent immigrant unfamiliar 

with the U.S. banking system. 

Underbanked consumers are similarly diverse, but their attitudes, motivations, and perceptions about using nonbank and 

bank products and services are somewhat different than for 

unbanked consumers. Banks seeking to serve a greater share 

of their financial services needs will benefit from understanding those needs and how they can compete with nonbank 

service providers.

Ultimately, banks need to understand this diversity in unbanked and underbanked populations and the factors that 

motivate these consumers, recognizing that diversity likely 

exists even among consumers in the same community. Banks 

can use this information to develop more effective strategies 

to engage consumers. 

The findings from this qualitative research build a more 

in-depth understanding of bank efforts to serve unbanked, 

underbanked, and LMI consumers. These findings also 

enhance our understanding of consumer and household 

decision making for financial services from bank and nonbank 

providers. This should support bank efforts to more effectively 

serve the financial service needs of these consumers, 

especially those who live in LMI communities. Overall, the 

findings from this study also should inform research and 

policy efforts aimed at promoting the financial health and 

well-being of consumers and their families. 

11 Ibid., page. 25.
35

Bank Efforts to Serve Unbanked and Underbanked Consumers

Qualitative Research

APPENDIX. RESEARCH METHODOLOGY

This qualitative research study incorporated several methodological steps to fulfill its objectives, which are described in 

detail below. The initial step was a knowledge scan to collect 

preliminary information about existing bank efforts to engage 

unbanked, underbanked, and LMI consumers. Once these 

efforts were identified, the remaining steps were to collect primary qualitative data during four phases: two phases included 

one-on-one interviews with bank and nonprofit executives; 

and the second two phases were focus groups with consumer counselors and consumers. 

Knowledge Scan

The knowledge scan included a literature review and interviews with banking institutions, nonprofit organizations, and 

government agencies identified from the literature review as 

leaders in efforts to bring unbanked, underbanked, and LMI 

consumers into the banking system. Based on the literature 

review and interviews with experts in the field, researchers 

identified several approaches banks can use to better serve 

these consumers, including:

• Offering specific deposit accounts and other financial 

products and services that help meet the needs of 

unbanked and underbanked consumers in the bank’s 

market area, focusing especially on financial services 

as alternatives to nonbank providers and bank account 

features and functions that address reasons cited by 

consumers for being unbanked.

• Developing external and internal policies or plans of 

action to improve relationships with unbanked, underbanked, and LMI consumers, and help these consumers 

participate in the financial mainstream. 

The four primary data collection phases drew on the information collected from the knowledge scan and were carried 

out from August to December 2015. Most of these phases 

were conducted sequentially so that findings from each phase 

could inform subsequent phases of the work. 

Phase 1 (August-September 2015)

Phase 1 included interviews with bank executives involved in 

initiatives to encourage unbanked and underbanked consumers to open and retain accounts. The interviews were 

conducted primarily by telephone, with a few in-person 

interviews. These banks were selected based on previous 

FDIC research or information gathered during the knowledge 

scan. The selection criteria also considered the candidate 

bank’s asset size and market area, with a goal of selecting 

banks with a range of asset sizes and with market areas that 

together cover most regions of the country. Overall, 13 banks 

were identified; executives at 11 of these banks agreed to be 

interviewed. Five banks had assets of more than $1 billion, 

three had assets between $250 million and $1 billion, two 

had assets between $100 and $250 million and one bank had 

assets of less than $100 million. 

The interview guide covered topics including motivation 

for the initiatives, details about implementation, challenges 

encountered, lessons learned, and perceptions of success. 

Although the same base protocol was used for all interviews, 

each interview was customized to focus on specific products 

or strategies that had been identified as effective in reaching 

and serving unbanked, underbanked, and LMI consumers. 

Phase 2 (September-October 2015)

Phase 2 included telephone and in-person interviews with 

executives from eight nonprofit organizations involved in initiatives discussed by Phase 1 bank executives. Selection for 

participation also took into consideration geographic diversity. 

The interview process followed the same course as Phase 1 

and covered similar topics. 

Phases 3 and 4 (November-December 2015)

Phase 3 of the research consisted of eight in-person focus 

groups with financial counselors from nonprofit organizations 

and Phase 4 included eight in-person focus groups with 

unbanked, underbanked, and LMI consumers. Together, the 

16 focus groups took place in five locations: Los Angeles, CA; 

New York, NY; Jackson, MS; Mobile, AL; and Cleveland, OH. 

Two consumer focus groups (one in New York City and one 

in Los Angeles) were conducted in Spanish. 
36 | Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research 

The cities selected were geographically diverse and represented areas within the retail footprint of one or more 

banks included in the study. Participants in the Phase 3 

and Phase 4 focus groups were not screened to be having 

or having had a relationship (e.g., client, customer, or partner) with banks that were interviewed in Phase 1. Therefore, the perspectives consumer counselors or consumers 

shared were unlikely tied to experiences they had with any 

bank included in the study. 

Nonprofit organizations that provided financial education or 

counseling to LMI populations in each of the five locations 

were recruited for the consumer counselor focus groups. 

Multiple sources were used to identify these organizations, 

including referrals provided by bank and nonprofit executives that were interviewed for the study, FDIC recommendations, and research. Ultimately, 64 counselors who work 

directly with LMI consumers on financial issues participated in the focus groups, which included a maximum of two 

counselors from any individual nonprofit organization. 

The consumer focus groups were held in the same five cities and included 79 participants. Individuals were recruited 

through nonprofit organizations and professional facilities. 

These individuals were screened on a number of characteristics, including demographic background, employment 

status, and their financial experiences and behaviors. As 

shown in Table A, 47 percent were unbanked (did not have 

a bank account) and 23 percent were underbanked (had a 

bank account and used nonbank financial services). More 

than half of the participants had used nonbank short-term 

credit products in the previous six months, while slightly 

more than one-third had used a GPR prepaid card at least 

twice in the previous three months. In addition, 44 percent 

of participants were African American, 38 percent were 

Hispanic, and 13 percent were white. Overall, this screening resulted in a diverse pool of consumers participating in 

focus groups. 

Both Phase 3 and Phase 4 focus groups covered multiple 

topics, including the methods used to make and receive 

payments; their perceptions of banks and AFS providers; 

considerations when deciding whether to open or retain 

bank accounts; challenges or barriers encountered by 

consumers seeking to become fully banked; and feedback 

on specific products or strategies identified as effective 

in reaching and serving unbanked, underbanked, and LMI 

consumers. Financial counselors and consumers who 

participated in the focus groups were paid stipends for 

their time. 
37

Table A. Characteristics of Consumer Focus Group Participants

PARTICIPANT CHARACTERISTICS PARTICIPANTS (%)

GENDER

Male 43

RACE/ETHNICITY

African American 44

White 13

Hispanic 38

More than one/Other 5

BANK STATUS

Unbanked 47

Underbanked1 23

EMPLOYED STATUS

Employed 71

USERS OF PREPAID CARDS2

Yes 37

USERS OF PAYDAY OR OTHER ALTERNATIVE 

FINANCIAL SERVICES CREDIT3

Yes 35

USERS OF NONBANK CHECK CASHING SERVICES4

Yes 58

EARNED INCOME TAX CREDIT RECIPIENTS5

Yes 23

PARTICIPANT TOTAL = 79

Notes:

1 Underbanked participants were defined as those who had a bank account and had used transactional nonbank financial 

services at least two times in the past three months. 

2 These participants were defined as those who had used a GPR prepaid card at least twice in the previous three months. 

Respondents were asked not to consider gift cards or debit cards linked to a checking account. 

3 These participants were defined as those who had used a payday/payday advance, auto title, or pawn shop loan in the 

previous six months. 

4 These participants were defined as those who had gone to a place other than a bank or credit union to cash a check at least 

twice in the past three months. 

5 These participants were defined as those who had their federal and/or state taxes done for free at a location hosted by a 

nonprofit organizations and had received an Earned Income Tax Credit during the past tax season.