April 2012

Final Report

FDIC 

Model Safe

Accounts

Pilot

Federal Deposit

Insurance Corporation
FDIC Model Safe Accounts Pilot n APRIL 2012 1

Executive Summary

The FDIC is committed to ensuring that all consumers 

have access to safe and affordable banking services at 

federally insured financial institutions. On 

January 1, 2011, the FDIC launched a one-year pilot 

program, the Model Safe Accounts Pilot, with nine 

financial institutions to determine the feasibility of 

offering safe, low-cost transaction and basic savings 

accounts (Safe Accounts) to help meet the needs of 

underserved and low- and moderate-income (LMI) 

consumers. 

Safe Accounts are checkless, card-based electronic 

accounts that allow withdrawals only through automated teller machines, point-of-sale terminals, automated 

clearinghouse preauthorizations, and other automated 

means. Because they are driven largely by electronic 

payments, Safe Accounts have limited acquisition and 

maintenance costs. These accounts followed the FDIC 

Model Safe Accounts Template, which focuses on 

lower-cost, electronic payments and prohibits overdraft 

or nonsufficient funds fees. Most pilot institutions set 

up programs tailored to the needs of specific consumer 

segments, such as young adults and unbanked individuals who previously had been banked. 

Each quarter the FDIC collected basic information 

about the number of Safe Accounts opened and closed, 

and the average opening and monthly balances. Major 

findings from the pilot include the following:

• More than 3,500 Safe Accounts—662 transaction 

accounts and 2,883 savings accounts—were 

opened during the one-year pilot. 

• Account retention rates exceeded pilot 

institution expectations, with more than 80 percent 

of transaction accounts and 95 percent of savings 

accounts remaining open at the end of the pilot.

• The monthly balance was fairly consistent 

across institution transaction accounts, averaging 

$243 during the pilot period. For savings accounts, 

the balances varied widely, depending on the 

institution’s particular business model and 

savings program.

• Most institutions reported that the cost of 

offering Safe Accounts was roughly the same 

if not lower than the costs of offering other 

accounts because the pilot accounts do not 

have any paper check-related costs. 

• Calculating the cost recovery or profitability 

of Safe Accounts was a challenge largely because 

pilot institutions tended to have different 

accounting methodologies, varied business 

operations, and technology infrastructure 

limitations. 

The participating institutions shared a number of 

valuable insights and lessons learned, including the 

following:

• Many different business models emerged, 

suggesting that the FDIC Model Safe Accounts 

Template is flexible enough to be used in a 

wide variety of circumstances. Pilot 

institutions used a partnership model, re-entrant 

model, new entrant model, cross-selling model, or 

Internet model.

• Real time, front-line relationship building was 

important. Many of the pilot institutions trained 

their tellers and customer service representatives 

to offer Safe Accounts and provide basic financial 

education to potential customers who would be 

ineligible for other deposit accounts.

• Pilot institutions reported a relatively low risk 

of overdrafts, and some pilot institutions stated 

that they found Safe Accounts to be no more 

risky than other deposit accounts.

• Several pilot institutions stated that any 

concerns that they may have harbored about 

potential fraud risks at the beginning of the 

pilot were not realized.

Pilot banks noted some challenges with traditional 

marketing and outreach strategies, but reported that 

training staff about the benefits of Safe Accounts and 

how to offer them to underserved and LMI consumers 

was often a successful strategy. For many banks, one 
FDIC Model Safe Accounts Pilot

n APRIL 2012

2

of the most effective ways to reach potential customers 

was through the operation’s front line—teller windows 

or customer service desks. Pilot banks also reported 

that collaborating with community-based partners was 

useful for identifying target consumers.

The results of this one-year pilot suggest that opportu-

nities exist for financial institutions to offer safe, lowcost transaction and savings accounts to underserved 

and LMI consumers. The fact that a large proportion of 

accountholders remained banked during the first year 

suggests that consumers can maintain successful bank-

ing relationships using Safe Accounts. The relatively 

low overdraft risk, in combination with the higher 

retention rates, suggests that Safe Accounts may have 

greater longevity and lower costs than other deposit 

accounts. Safe Accounts performed on par with or 

better than other transaction and savings accounts.

As a voluntary pilot project with nine institutions, 

the information collected on the accounts cannot be 

taken to represent the banking industry or consumers 

nationwide. Rather, the descriptive data provided in this 

report are simply the combined account information for 

all pilot institutions and, as such, provide insights about 

these institutions’ experiences and observations. 

Undertaking this pilot was important to informing the 

FDIC’s efforts on economic inclusion. For example, the 

banks’ experiences suggest that the FDIC may choose 

to revise the Model Safe Accounts Template by de-

creasing the emphasis on auxiliary services in the early 

stages of customer banking relationships. Overall, most 

participating institutions reported that they learned 

valuable lessons from the pilot and were encouraged 

by their initial experience of offering a safe, low-cost 

alternative that appeared to meet the needs of under-

served and LMI consumers.
FDIC Model Safe Accounts Pilot n APRIL 2012 3

Model Safe Accounts Pilot

Introduction

On January 1, 2011, the FDIC launched a one-year 

pilot, the FDIC Model Safe Accounts Pilot, with nine 

financial institutions to determine the feasibility of offering safe, low-cost transaction and savings accounts 

(Safe Accounts) to help meet the needs of underserved 

and low- and moderate-income (LMI) consumers. Safe 

Accounts are checkless, card-based electronic accounts 

that limit acquisition and maintenance costs. These 

accounts allow withdrawals only through automated 

teller machines, point-of-sale terminals, automated 

clearinghouse preauthorizations, and other automated 

means. Overdraft and nonsufficient funds fees are prohibited with the transaction accounts. Because they are 

driven largely by electronic payments, Safe Accounts 

have limited acquisition and maintenance costs. Safe 

Account funds are FDIC-insured and are subject to 

applicable federal and state consumer protection laws. 

Figure 1 lists the names of the nine institutions selected 

for the pilot, as well as their asset size and location. 

This report discusses the FDIC’s broader economic 

inclusion efforts, the pilot’s results, the lessons learned, 

and the challenges encountered during the pilot. The 

pilot showed that safe, low-cost accounts are valuable 

to consumers and feasible for banks. Several business 

models for deploying these accounts emerged from 

the pilot. As a result, pilot institutions adopted diverse 

outreach and marketing strategies to reach specific 

consumer markets. 

Banks opened more than 3,500 Safe Accounts during 

the pilot. Retention of these accounts exceeded expectations. More than 80 percent of transaction accounts 

and 95 percent of savings accounts remained open at 

the end of the one-year pilot period. Safe Accounts 

performed on par with or better than other transaction 

and savings accounts. 

The institutions viewed the pilot experience as valuable, and many found that Safe Accounts could help 

grow their customer base. Several institutions plan to 

continue to offer Safe Accounts, and some spoke 

about the possibility of graduating pilot accountholders 

to traditional deposit accounts. Insights from this 

pilot suggest that more institutions might find it 

attractive to offer safe, low-cost accounts to 

underserved consumers.

Promoting Consumer Access to Safe Financial 

Services Products

The FDIC is committed to ensuring that all consumers 

have access to safe and affordable banking services at 

federally insured financial institutions. Participation 

in mainstream financial markets improves consumers’ 

ability to build assets and create wealth; promotes 

FDIC Model Safe Accounts Pilot

Participating Financial Institutions

Name of Asset Size 

Institution ($000s)*

Bath Savings Institution 636,748

Bath, Maine 

Citibank 1,288,658,000

New York, New York

Cross County 

Savings Bank 411,653

Middle Village, New York

First State Bank 1,646,228

Union City, Tennessee

ING DIRECT 92,212,498

Wilmington, Delaware

Liberty Bank and 

Trust Company 559,358

New Orleans, Louisiana

Pinnacle Bank 3,171,239

Lincoln, Nebraska

South Central Bank 276,250

Glasgow, Kentucky

Webster Five Cents 

Savings Bank 558,872

Webster, Massachusetts

*Note: Total assets as of December 31, 2011.

Source: FDIC

Figure 1 
FDIC Model Safe Accounts Pilot n APRIL 2012 4

savings and financial stability; helps protect consumers 

from theft and discriminatory, predatory, or otherwise 

deleterious lending practices; and provides a financial 

safety net against unforeseen circumstances. Access to 

banking services at an insured financial institution also 

ensures that consumer funds are safeguarded from loss 

and that they benefit from statutory protections. 

Guaranteed federal deposit insurance is fundamental 

to promoting confidence in the banking system and is 

the foundation of a safe and secure financial system.1

Consumers who hold deposit accounts at insured 

financial institutions benefit from never having 

to worry whether their money is at risk, up to the 

insurance limit. Applicable state and federal consumer 

protection laws also provide many other consumer 

rights. For example, the Electronic Funds Transfer Act, 

implemented by Regulation E, protects consumers who 

use electronic funds transfers, with regard to dispute 

resolution and the availability of account statements.2 

As part of its commitment to economic inclusion, 

the FDIC sponsors two biennial surveys to better 

understand the demand for and supply of financial 

services for underserved consumers.3 The first survey, 

the FDIC Survey of Unbanked and Underbanked 

Households (Household Survey), is conducted as 

a special supplement to the U.S. Census Bureau’s 

Current Population Survey. The 2009 survey findings 

determined that an estimated 7.7 percent of U.S. 

households, representing approximately 9 million 

households (accounting for at least 17 million adults), 

were unbanked. Approximately one-half of all 

unbanked consumers previously held a bank account at 

an insured financial institution. Unbanked consumers 

cited various reasons for not holding a bank account. 

1 More information about FDIC insurance coverage is available at http://www.fdic.

gov/deposit/.

2 More information about Regulation E is available at http://www.consumerfinance.gov/guidance/supervision/manual/efta-narrative/.

3 Section 7 of the Federal Deposit Insurance Reform Conforming Amendments Act 

of 2005 (Reform Act) requires that the FDIC conduct surveys to determine how the 

financial services industry is serving unbanked and underbanked households and 

to identify the financial services used among these households.

The most common explanations were not having 

enough money, incurring too many overdrafts, not 

wanting or needing an account or not seeing the value 

of an account, and not trusting banks.4 The second 

survey, the FDIC Survey of Banks’ Efforts to Serve 

the Unbanked and Underbanked (Bank Survey), is 

a nationwide survey of FDIC-insured depository 

institutions that reports on banks’ efforts to serve 

unbanked and underbanked individuals and families. 

This survey, also published in 2009, found that most 

banks were aware that their market areas contained 

significant unbanked and underbanked populations, 

but relatively few banks had made it a priority to 

target these market segments. Moreover, many banks 

offered basic checking accounts to all customers, but 

few offered deposit, payment, credit, and electronic 

products that address the differentiated needs of 

unbanked and underbanked customers.5

The findings from the Household and Bank Surveys 

help inform FDIC policy and provide the basis for 

initiatives like the FDIC Model Safe Accounts Pilot. 

Underserved and LMI consumers would benefit from 

obtaining safe, reasonably priced, opportunities to 

cash checks, store and save funds, gain access to cash 

when needed, pay bills, purchase money orders, make 

account-to-account money transfers, and send or 

receive remittances. The findings from the FDIC Model 

Safe Accounts Pilot provide insights into the feasibility 

of offering safe, low-cost accounts that allow unbanked 

individuals to establish bank relationships or bring 

former bank customers back into the system. 

Participating pilot institutions offered electronic, 

card-based deposit accounts with product features 

identified in the FDIC Model Safe Accounts Template. 

4 See FDIC December 2009 Household Survey report.

5 The December 2009 Household Survey report can be accessed at http://www.

economicinclusion.gov/, and the Bank Survey report published in February 2009 

can be accessed at http://www.fdic.gov/unbankedsurveys/2008survey/index.

html. Administration of the second Household and Bank surveys will result in 

reports expected to be published in 2012.
FDIC Model Safe Accounts Pilot n APRIL 2012 5

The Template provides guidelines about the core and 

auxiliary features and fees for transaction and savings 

accounts.6

Listed below are the main features and fees included in 

the Template.

• Overdraft and NSF fees are prohibited for 

transaction accounts.

• Opening balance requirements are low. 

Transaction accounts can be opened with as little 

as $10, and savings accounts can be opened with

as little as $5.

• Monthly balance requirements are low. The 

Template suggests minimum monthly balances 

of $1 and $5 for transaction and savings accounts, 

respectively.

Pilot Results

Each quarter during the 2011 pilot period, participating 

banks submitted brief reports on the number of 

accounts opened, the number of accounts closed, 

account balances, and other data on account features. 

To collect more subjective and difficult-to-quantify 

information, the FDIC called each institution every 

quarter. These conversations provided additional details 

on the accounts, the operation of the pilot, and the 

institutions’ unique challenges and circumstances.

As a voluntary pilot project with nine institutions, 

the information collected on the accounts cannot be 

taken to represent the banking industry or consumers 

nationwide. Rather, the descriptive data provided in this 

report are simply the combined account information for 

all pilot institutions and, as such, provide insights about 

these institutions’ experiences and observations. 

In all, the nine participating banks opened more than 

3,500 transaction and savings accounts during the pilot. 

6 For more information about the features and fees included in the FDIC Model 

Safe Accounts Template, see Figure 5. 

Transaction Accounts

Most of the pilot institutions focused primarily on 

transaction accounts, which generally serve customers 

coming into the banking system for the first time or 

re-entering the banking system. Seven of the nine pilot 

banks offered both types of Safe Accounts—transaction 

and savings— while two institutions offered only 

savings accounts. Those seven pilot banks opened 

662 transaction accounts during the pilot period. As 

shown in Figure 2, pilot transaction account openings 

were fairly consistent from quarter to quarter, ranging 

from about 130 to 190 per quarter. The number of 

accounts opened by each institution varied, but most 

banks opened approximately 10 to 25 each quarter, and 

between 50 and 100 for the year. 

One promising result of the pilot is that a relatively 

small number of accounts were closed. Of the 662 pilot 

transaction accounts opened, 126 (about 20 percent) 

had closed by the end of the fourth quarter, leaving 

536 pilot transaction accounts open. As expected, the 

number of closed accounts climbed throughout the 

pilot as more accounts were opened and the accounts 

became seasoned; however, the overall account 

retention rate at the end of the pilot exceeded 80 

percent, implying that the accounts are sustainable. 

Conversations with the banks confirmed that the 

retention rates were at least as good as, and often 

better than, those on other transaction accounts at the 

institutions, and some bankers stated that the account 

performance exceeded their expectations. 

Although roughly 20 percent of the transaction 

accounts were closed by the end of the pilot, 

industry sources suggest that up to 30 percent of new 

accountholders close their account during the first year. 

The lower pilot account closures offer some optimism 

that these accounts may have performed at least as 

well as if not better than the industry average.7 The 

relatively high Safe Accounts retention rates suggest 

that opportunities exist for keeping consumers in 

successful banking relationships using Safe Accounts.

7 See “Cut New Accountholder Attrition in Half,” Quarterly Industry Newsletter, Harland and Clark, accessed at http://harlandclarke.com, December 2011, and Retail 

Banking Data Statistics, Insight Ecosystems, accessed at www.insightecosystems.

com/Resources/Statistics.aspx, December 2011.
FDIC Model Safe Accounts Pilot n APRIL 2012 6

Figure 3 shows that pilot institution transaction 

accounts were opened with an average of $244.20 over 

the pilot period. Most banks saw transaction accounts 

opened with an average of between $200 and $400. 

Institutions reported average monthly balances that 

were more consistent across quarters: between $200 and 

$300 each quarter, or $242.89 across all four quarters. 

Savings Accounts

Several pilot institutions said they perceived greater 

customer need and demand for the pilot transaction 

accounts than the pilot savings accounts, and that 

customers found it challenging to set aside the 

additional funds required to maintain a savings account 

while also trying to manage a pilot transaction account. 

However, other pilot banks opened large numbers of 

pilot savings accounts and reported few concerns with 

consumer use. 

As mentioned above, seven of the nine pilot banks 

opened both types of pilot accounts, and two 

institutions opened only savings accounts. As shown in 

Figure 4, banks opened 2,883 savings accounts during 

the pilot. The number of pilot savings accounts opened 

each quarter varied between approximately 600 and 

800. The number of accounts opened by individual 

institutions differed dramatically, depending on the 

institution’s program, and ranged from less than 20 to 

more than 1,000.

Like the pilot transaction accounts, retention rates on 

pilot savings accounts were high. Of the 2,883 savings 

accounts opened as part of the pilot, only 141 had 

closed by the end of 2011, leaving 2,742 open. At the 

conclusion of the pilot, the retention rate for savings 

accounts was 95 percent. The retention rate was 

consistent across institutions, regardless of the program 

or business model used. Pilot institutions reported that 

they were pleased with the retention and performance 

of the pilot savings accounts.

Although retention rates were high, banks’ experiences 

with the pilot savings accounts varied widely because 

institutions used different business models. Some 

banks focused exclusively on pilot savings accounts, 

while others considered savings account openings 

secondary to pilot transaction account openings. For 

example, while one bank offered pilot savings accounts 

in conjunction with a very narrowly targeted program 

run by a large nonprofit organization, other banks 

offered the accounts more widely, to a broader range of 

customers. As a result, average opening and monthly 

balances on the pilot savings accounts ranged from $20 

to over $3,000.

Figure 3 

FDIC Model Safe Accounts Pilot

Banks’ Transaction Account Balances*

1Q 2Q 3Q 4Q Average

Opening 

Balance

Mean $179.57 $219.08 $402.83 $175.31 $244.20

Median $222.00 $180.00 $290.23 $90.91

Monthly 

Balance

Mean $235.02 $237.45 $291.69 $207.40 $242.89

Median $235.00 $230.06 $246.87 $183.81

*Notes: Means and medians presented in this table are calculated based on the averages 

of the participating institutions and are not based on account-level data.

Source: FDIC

FDIC Model Safe Accounts Pilot

Transaction Account Openings and Retention

1Q 2Q 3Q 4Q Total

Accounts Opened 173 167 189 133 662

Accounts Closed 8 23 50 45 126

Retention Rate 81%

Figure 2 

Source: FDIC
FDIC Model Safe Accounts Pilot n APRIL 2012 7

Costs and Feasibility

The pilot institutions had difficulty calculating the cost 

recovery or profitability of Safe Accounts. They did not 

uniformly define and allocate fixed and variable costs. 

Further, the business operations for the institution’s 

portfolio of financial products likely differed somewhat 

from the business operation needed to run a one-year 

pilot. Information technology infrastructure limitations 

also made it difficult to monitor and track costs and 

revenues for single lines of business, such as the Safe 

Accounts, and not all financial institutions chose to do 

so because of the added cost. 

In discussing the viability of offering these accounts, 

many pilot institutions reported that the marginal costs 

of the accounts were nominal or approached zero. The 

revenues generated from interchange fees earned on 

the debit card transactions and possibly from revenues 

collected for the monthly maintenance fees could help 

cover the costs associated with Safe Accounts, making 

them a viable product in the marketplace.

When asked how these accounts compared to their 

other deposit accounts, most of the pilot institutions 

reported that the cost of offering Safe Accounts 

was roughly the same if not lower because the pilot 

accounts do not have paper check-related costs. 

Institutions also said that the potential overdraft risk 

was relatively low. In fact, a number of the banks stated 

that they found the Safe Accounts to be no more risky 

than other deposit accounts and may have actually been 

less risky. Coupling the relatively low overdraft risk 

with the higher account retention rates suggests that 

Safe Accounts may have greater longevity and lower 

acquisition costs than other accounts.

Lessons Learned 

During quarterly conversations, institutions shared 

some of the lessons they learned during the one-year 

pilot. Of particular importance was the emergence of 

different business models among pilot institutions; 

the value of real time, front-line relationship building; 

and the rarity of account fraud and overdrafts. Pilot 

institutions also found that performance measures 

such as Safe Account retention rates exceeded their 

expectations. 

Different Business Models Emerged. A variety of 

business models emerged from the pilot, demonstrating 

that the Model Safe Accounts Template is flexible 

enough to be used in a wide variety of circumstances 

and can be tailored to meet the needs of specific 

consumer segments within the institution’s footprint, 

or offered more broadly. The business models should 

not be viewed as mutually exclusive. Indeed, several 

pilot institutions found it particularly helpful to use 

a blended approach that included features from more 

than one of the following business models. 

Partnership Model – Several institutions established 

and leveraged partnerships with third parties as a 

way to advance outreach and marketing efforts and to 

identify potential account applicants. Numerous pilot 

institutions partnered with nonprofit organizations, 

community groups, businesses, and local or state 

government agencies and officials to conduct outreach 

and market Safe Accounts to underserved consumers. 

Banks described partnerships that took several forms, 

from working with a well-established, worldwide 

nonprofit microfinance organization to collaborating 

with a local temporary employment agency and 

offering pilot transaction accounts to unbanked 

workers. Pilot institutions found partnerships to be 

particularly useful in reaching the targeted unbanked 

and underbanked consumers. 

Pilot banks reported that identifying suitable partners 

and developing relationships was a challenging 

process that often took time. Nonetheless, several 

institutions were committed to pursuing longer-term, 

relationship-building efforts with organizations in their 

communities. In these cases, some of the relationships 

likely will continue after the one-year pilot.

FDIC Model Safe Accounts Pilot

Savings Account Openings and Retention

1Q 2Q 3Q 4Q Total

Accounts Opened 824 617 693 749 2,883

Accounts Closed 13 37 53 38 141

Retention Rate 95%

Figure 4 

Source: FDIC
FDIC Model Safe Accounts Pilot n APRIL 2012 8

Re-Entrant Model – Several pilot institutions offered 

Safe Accounts as “second chance” accounts to 

consumers who had prior banking problems and 

were listed with a consumer reporting agency such as 

ChexSystems , or who otherwise were ineligible to 

open a deposit account.1Banks that used this model 

were pleased that they could help these consumers 

rejoin the financial mainstream. 

New Entrant Model – A number of pilot institutions 

marketed Safe Accounts to individuals who had 

never had a bank account, especially young adults. 

For example, one bank used this model to provide 

transaction accounts to at-risk young adults in 

conjunction with a job training program. 

Cross-Selling Model – Several pilot institutions that 

focused primarily on either savings or transaction 

accounts took the opportunity to cross sell the other 

account type. One of the savings institutions, for 

example, offered transaction accounts to its existing 

savings account customers, while other institutions 

offered both types of accounts to applicants who came 

in seeking an account.

Internet Model – One pilot institution ran its operations 

entirely through an Internet platform. The institution 

launched several marketing and advertising campaigns 

to offer savings accounts to consumers in four distinct 

markets. 

8 ChexSystems is a consumer reporting service used by financial institutions to 

keep track of negative information relating to how consumers manage or use 

their deposit accounts, such as repeatedly overdrawing accounts or depositing 

fraudulent checks. More information about ChexSystems is available at www.

consumerdebit.com/consumerinfo/us/en/index.htm.

Real Time, Front-Line Relationship Building Was 

Important. For many banks, one of the most effective 

ways to reach potential customers was through the 

operation’s front line—teller windows or customer 

service desks. Many pilot institutions trained their 

tellers and customer service representatives to offer 

Safe Accounts to potential customers who would be 

ineligible for other deposit accounts because of 

banking history problems, low incomes and/or account 

balances, or other risk factors. This training also 

included helping consumers understand how to manage 

and monitor their accounts. Tellers provided useful, 

hands-on financial education, an important step toward 

relationship building. As a result of effective teller 

training, several institutions were better able to match 

consumers with viable, safe deposit accounts. Banks 

reported that in the absence of this option, many of 

these customers would likely have been turned away.

Concerns About Risk Not Realized. A few institutions 

shared their initial concerns about the potential risk 

of opening accounts to consumers who either had 

no experience or bad experiences with mainstream 

financial institutions. Some institutions were concerned 

about fraud and worried that accountholders would try 

to take advantage of the institution by, for example, 

making empty envelope deposits or purchasing 

third-party checks for the pilot’s checkless, cardbased account. Fortunately, instances of fraud or 

intentional mismanagement were rare and isolated. 

Banks reported that account performance, in terms 

of retention rates and overdraft risk, exceeded their 

expectations. Importantly, even though these accounts 

were designed not to include overdraft fees and were 

set up to minimize the potential for an accountholder to 

overdraft their account, some institutions believed that 

offline transactions would make overdrafts possible. 

However, pilot banks overwhelmingly reported that the 

instances of overages on the accounts were no higher 

than those experienced on other deposit accounts. At 

the conclusion of the pilot, several institutions spoke 

about how their experience with the pilot allayed their 

concerns about potential fraud and overdraft risks. 
FDIC Model Safe Accounts Pilot n APRIL 2012 9

Challenges

The challenges institutions experienced during the 

pilot primarily focused on marketing, advertising, 

and developing relationships with consumers either 

unfamiliar with or wary of banks. 

Marketing and Advertising. Several institutions said

they found it challenging to effectively market and 

advertise the Safe Accounts. Some banks mentioned 

that budgetary and resource constraints, exacerbated 

by difficult local economic conditions, limited the time 

and money spent on advertising. Other banks found it 

difficult to reach the intended customers, without being 

so broad as to lower applicant quality. 

Establishing a Presence in New Markets. Several 

banks spoke about the challenge of reaching potential 

customers in communities with a strong presence of 

nonbank financial services providers. Because of this 

competition, pilot banks found it difficult to reach 

residents who were more familiar with those providers. 

These consumers also may have had either little 

experience with banks or may have had a negative 

perception of banks. 

Ensuring Adequate Staff Training. A few institutions 

described the importance of providing effective staff 

training on Safe Accounts. While staff training was 

an effective way to reach potential customers, a few 

institutions said that they had to help staff adapt to the 

Safe Accounts business model, which often had more 

flexible eligibility requirements than other accounts. 

As a result, institutions successfully trained their 

staff on how to offer the accounts to unbanked and 

underbanked consumers, helping these consumers to 

return to the financial mainstream. 

Some banks overcame these challenges by working 

with community-based partners, others turned to their 

own branch staff to spread the word, and some tested 

more traditional approaches such as direct mail and 

email. Most bankers viewed participation in the pilot 

as a valuable venue for learning more about how to 

market and conduct outreach to consumers who have 

always been unbanked, to those who were formerly 

banked, and to the underbanked.

FDIC Model Safe Accounts Template

Every bank that participated in the FDIC Model Safe 

Accounts Pilot agreed to offer transaction accounts, 

savings accounts, or both according to the guidelines 

in the FDIC Model Safe Accounts Template. The 

Template establishes criteria for transaction and savings 

accounts that are safe and affordable for consumers and 

cost-effective for banks. 

Background

On April 1, 2010, the FDIC shared with its Advisory 

Committee on Economic Inclusion (ComE-IN) a 

draft Model Safe Accounts Template for discussion 

and comment. The FDIC incorporated feedback 

from the ComE-IN and on May 7, 2010, published 

the draft Template for public comment. The FDIC 

received 46 comments by the June 6, 2010 deadline. 

After considering the comments, the FDIC presented 

a revised Template for additional discussion and 

comment at a second ComE-IN meeting on June 

24, 2010. On August 10, 2010, the FDIC Board of 

Directors approved the FDIC Model Safe Accounts 

Pilot, based on the Template displayed in Figure 5.

Guiding Principles of the FDIC Model Safe Accounts

Template

The Template describes checkless, card-based, 

electronic accounts that do not permit overdraft or 

NSF fees. These features are integral to the goal of 

providing consumers with safe, low-cost accounts that 

are also feasible for banks. Overdrafts also are one of 

the reasons why previously banked consumers closed 

their accounts, making the curtailment of overdraft and 

NSF fees important for the FDIC’s economic inclusion 

mission. However, during the comment process on the 

Template and the selection process of banks for the 

pilot, it became clear that some banks hesitated to give 

up the substantial revenue that these fees generated. 

9 More information about the FDIC’s efforts for the Model Safe Accounts Pilot 

and the creation of the Template is available at http://www.fdic.gov/consumers/

template/.
FDIC Model Safe Accounts Pilot n APRIL 2012 10

Figure 5 

Elements of the FDIC Model Safe Accounts

Transaction Account Basic Savings Account

Core Features and Fees

Card-based electronic account √ √

No overdraft or NSF fees √ --

Interest bearing -- √

Direct deposit Free Free

Automatic saving Free Free

Online and mobile banking/ bill pay Free Free

Electronic statements (with 

consumer’s consent)

Free Free

Opening balance $10 - $25 $5

Monthly minimum balance $1 $5

Monthly maintenance fee Up to $3 None, if minimum balance is met

Money orders/e-checks 2 free per month, additional for a fee 

that is reasonable and proportional to 

the cost --

Check cashing Drawn on insured institution: Free

Not drawn on insured institution: Fee 

that is reasonable and proportional 

to cost 

Drawn on insured institution: Free

Not drawn on insured institution: Fee 

that is reasonable and proportional 

to cost

General funds availability (subject 

to appropriate exceptions, e.g. large 

deposits)

Same day or next day from an 

established customer

Same day or next day from an 

established customer

Auxiliary Services and Fees

Financial education Free Free

Linked savings account Transfer fees that are reasonable and 

proportional to cost

--

Line of credit Rates and fees that are reasonable 

and proportional to cost --

Small-dollar loans (less than $2500) Terms and conditions consistent with 

the FDIC’s Safe, Affordable, and Feasible Template for Small-Dollar Loans

Terms and conditions consistent with 

the FDIC’s Safe, Affordable, and Feasible Template for Small-Dollar Loans

Kiosk bill payment Fees that are reasonable and 

proportional to cost

Fees that are reasonable and 

proportional to cost

Domestic and international wire 

transfers

Fees that are reasonable and 

proportional to cost

Fees that are reasonable and 

proportional to cost

The FDIC Model Safe Accounts Template provides insured institutions with guidelines for offering cost-effective 

transaction and savings accounts that are safe and affordable for consumers. The electronic deposit accounts are 

designed to meet the needs of underserved consumers. The accounts reflect the following guiding principles: 

transparent rates and fees that are reasonable and proportional to costs, access to banking services that feature 

FDIC insurance, and the protections afforded by applicable federal and state consumer protection laws, regulations, and guidelines. Standard customer identification rules would apply, including verification through the use 

of a variety of well-established, permissible forms of identification (see 31 C.F.R. § 1020.220). FDIC Model Safe 

Accounts also would be subject to all other applicable federal and state laws and regulations. 
FDIC Model Safe Accounts Pilot n APRIL 2012 11

Because the Template provides for accounts that are 

checkless and electronic, the possibility of overages is 

reduced, lowering the risk for banks. These electronic 

accounts also reduce bank maintenance costs, making 

the accounts more feasible to offer in the absence of 

revenue from overdraft fees. 

Opening Balance and Monthly Minimum Balance 

For transaction accounts, the Template suggests an 

opening balance of between $10 and $25 and a monthly 

minimum balance of no more than $1. For savings 

accounts, the Template suggests an opening balance 

of $5 and allows for a monthly minimum balance 

of $5 in order for consumers to avoid a monthly 

maintenance fee. These parameters were designed 

to remove common barriers to opening a deposit 

account for consumers. Pilot banks reported that 

these account features were reasonable. 

Monthly Maintenance Fee 

For transaction accounts, the Template allows for a 

monthly maintenance fee of no more than $3. The 

fee is designed to generate revenue for banks while 

still allowing the account to remain affordable for 

consumers. Several banks in the pilot chose not to 

charge a monthly maintenance fee, while a few banks 

did charge a fee. The banks that charged a fee said that 

the revenue it generated supplemented other revenue 

sources, like interchange fees, helping to sustain the 

accounts. Pilot participants suggested that a monthly 

maintenance fee that is reasonable and proportional 

to cost allows institutions the flexibility to account for 

factors such as regional cost differentials. 

Direct Deposit

The ability of the consumer to benefit from direct 

deposit depends on the willingness of the employer to 

either work with their financial institution or third-party 

payroll processor to offer this option to employees. 

Most pilot banks did not have the capacity to monitor 

Safe Accounts for direct deposit use, but virtually all 

agreed that this feature would be advantageous to their 

customers and their institution because of the reduced 

processing costs as well as lower account funding risk 

associated with direct deposit. 

Electronic Statements

Electronic statements were included in the Template 

as an option to consumers because they are important 

in helping reduce account maintenance costs for 

banks, which was supported by the pilot results. One 

bank that charged a monthly maintenance fee plans 

on continuing to offer Safe Accounts but will only 

charge a maintenance fee to consumers who receive 

paper statements. Another bank stated that electronic 

statements save their bank $1 per account every month. 

Money Orders and E-Checks

The Template is designed to allow consumers to meet 

all of their banking needs within the banking system. 

The Template included money orders or e-checks so 

consumers had a non-electronic payment option for 

rent and other bills. During the pilot, many banks said 

that few accountholders expressed or showed interest in 

obtaining money orders or e-checks, while others stated 

that some accountholders did obtain these products, but 

that the number was difficult to track. Even for those 

banks that observed accountholders getting money 

orders or e-checks from the teller, the occurrence 

seemed to be infrequent. While difficult to trace in 

the pilot, it would be helpful to learn whether some 

accountholders used their debit card and cash in lieu of 

money orders and e-checks or whether they obtained 

money orders or e-checks from nonbank sources such 

as post offices, check cashers, or retail establishments. 

Online and Mobile Banking and Bill Pay 

Pilot banks reported low consumer usage of bill 

pay services. This feature was intended to give 

consumers an additional means to conduct transactions 

without paper checks. However, one bank suggested 

that it was easier for consumers to pay bills over the 

phone using their debit card number. Online and mobile 

banking were included in the Template to provide 

consumers with more ways to make transactions at 

little additional cost to banks. By offering online and 

mobile banking and bill pay, banks can encourage 

consumers to use lower-cost financial services delivery 

channels, lowering overall maintenance costs. As 

financial services evolve, these features may become 

more important.
FDIC Model Safe Accounts Pilot n APRIL 2012 12

Check Cashing and Funds Availability 

The check cashing and funds availability elements 

of the Template were intended to address the day-today financial fragility of some underserved and LMI 

consumers and to respond to their need for immediate 

access to their funds on payday. The funds availability 

element in the Template mirrors existing legal 

requirements and encourages banks to be more flexible 

about making funds available immediately if they 

choose to offer this option. 4 Check-cashing services 

may also help ease the transition for consumers 

entering or re-entering the financial mainstream after 

a period of relying on nonbank financial services 

providers. However, at least one bank was reluctant to 

cash checks because it did not want to be misassociated 

with the nonbank financial services industry. However, 

funds availability is an important element in serving 

LMI consumers. To address these concerns, some 

banks promoted financial education and direct deposit 

to decrease the need for check cashing and support 

more sustainable banking habits for consumers. 

Automatic Savings 

The pilot institutions reported that automatic saving 

is a relatively sophisticated banking service that may 

be beyond the scope of the Template. For consumers 

just entering the financial mainstream or re-entering 

the banking system, long-term, regular saving may not 

be an immediate priority and may not seem feasible to 

them at account opening. However, saving and financial 

stability are important goals that benefit all consumers. 

Opening a transaction account is an important first step 

for consumers trying to reach financial stability and 

enjoy economic inclusion. Opening a safe, low-cost 

savings account might be considered a valuable second 

step for some consumers. When ready, consumers can 

benefit from automatic savings. However, according to 

the pilot banks, consumers seldom requested or used 

automatic saving. 

10 Funds availability is covered by Regulation CC. More information is available at 

http://www.federalreserve.gov/pubs/regcc/regcc.htm.

Financial Education 

Many pilot banks offered financial education to 

consumers. The most successful financial education 

focused on the basics of how a consumer uses the Safe 

Accounts. Tellers usually delivered this information 

in one-on-one discussions with consumers. This type 

of financial education is integral to helping consumers 

build financial stability, and it promotes trust and 

positive relationships between consumers and banks. 

Auxiliary Services

Also included in the Template was a list of auxiliary 

services, such as small dollar loans or line-of-credit 

products, that banks could offer accountholders. 

Pilot institutions were most interested in offering 

consumers transaction and/or basic savings accounts, 

and consumers were focused on the basic mechanics of 

opening and maintaining one or both of these accounts. 

Most of the auxiliary features were either beyond the 

immediate basic financial needs of pilot accountholders 

or did not interest the bank or the accountholder. 

However, pilot banks viewed credit products and 

features, such as linked savings accounts, as potentially 

useful for customers as their banking relationship 

matures. 
FDIC Model Safe Accounts Pilot n APRIL 2012 13

Conclusion

The results of the Model Safe Accounts Pilot suggest 

that opportunities exist for financial institutions to 

offer safe, low-cost transaction and savings accounts 

to underserved and LMI consumers. Perhaps the most 

encouraging finding was the high account retention 

rates. The fact that a large proportion of accountholders 

remained banked during the first year suggests 

that consumers can maintain successful banking 

relationships using Safe Accounts. 

Pilot institutions reported relatively low overdraft risk 

on these accounts, and a number of institutions stated 

that they found Safe Accounts to be no more risky than 

other deposit accounts. Pilot participants also learned 

that fraud concerns were largely unfounded. In general, 

the relatively low overdraft risk, in combination with 

the higher retention rates, suggests that Safe Accounts 

may have greater longevity and lower costs compared 

to other deposit accounts. 

Pilot banks noted some challenges with traditional 

marketing and outreach strategies, but they reported 

that training staff about the benefits of Safe Accounts 

and how to offer them to unbanked and underbanked 

consumers was a successful strategy. For many banks, 

one of the most effective ways to reach potential 

customers was through the operation’s front line—teller 

windows or customer service desks. Pilot banks trained 

tellers not only to identify potential customers for these 

accounts but also to provide account management 

financial education. Pilot banks also reported that 

collaborating with community-based partners was 

a useful technique for identifying target consumers. 

Pilot institutions set up programs that were tailored to 

meet the needs of specific consumer segments such 

as college students and unbanked individuals who 

previously had been banked. 

Safe Accounts followed the FDIC Model Safe 

Accounts Template, which focused on lower-cost, 

electronic payments and the prohibition of overdraft 

or NSF fees. Many business models emerged from the 

pilot, demonstrating that the Template is flexible, and 

across models, banks deemed the accounts successful 

on a number of measures. Pilot banks’ experiences 

suggest potential improvements to the Template, such 

as decreasing emphasis on the importance of auxiliary 

services in the early stages of customers’ banking 

relationship. 

Undertaking this pilot was important to informing the 

FDIC’s efforts on economic inclusion. Participating 

institutions reported that they gained valuable 

information from the pilot and were encouraged 

by their initial experiences offering a safe, lowcost alternative that appeared to meet the needs of 

underserved and LMI consumers.

Authors:

Sherrie L.W. Rhine, Senior Economist, Division of 

Depositor and Consumer Protection; srhine@fdic.gov

Susan Burhouse, Senior Financial Economist, Division 

of Depositor and Consumer Protection; sburhouse@

fdic.gov

The authors would like to thank Michael Barry for his 

valued assistance with this report, and the successful 

launch and completion of the pilot. In addition, we 

thank the staff at all of the banks that participated in 

the FDIC Model Safe Accounts Pilot for volunteering 

to work with us and sharing their experiences and 

insights throughout the pilot. We are grateful to Bath 

Savings Institution, Citibank, Cross County Savings 

Bank, First State Bank, ING DIRECT, Liberty Bank 

and Trust Company, Pinnacle Bank, South Central 

Bank and Webster Five Cents Savings Bank for their 

hard work and dedication to the project. 
FDIC Model Safe Accounts Pilot n APRIL 2012 14

Brief Description Of Pilot Institutions

Bath Savings Institution

Bath, Maine

Bath Savings, a mutual savings bank, offered a new 

eSafe transaction account and its existing Basic 

Savings account at its locations in coastal Maine. Not 

all of the institution’s savings customers are transaction 

account customers, so Bath Savings marketed its new 

eSafe transaction account to existing savings account 

customers. This cross-selling opportunity was a way 

for the bank to broaden its product offerings and 

provide increased value to its customers. The bank 

opened eSafe Accounts as second chance accounts for 

unbanked consumers and as first transaction accounts 

for college students in the area. The bank trained 

its employees to identify a variety of opportunities 

to promote eSafe Accounts across customer market 

segments; personalized marketing was found to be a 

particularly effective strategy. Bath Savings staff was 

trained to identify a variety of opportunities to promote 

these accounts across customer market segments. 

Direct contact marketing through customer service 

representatives was a more personal and effective 

approach than using marketing materials. 

Citibank

New York, New York

Citibank offered pilot savings accounts in several 

New York City branches in Upper Manhattan and 

Queens in partnership with Grameen America, an 

organization that provides affordable micro-loans 

to low-income entrepreneurs to enable them to start 

or expand small businesses and establish formal 

credit histories. All of the accounts were for women, 

most of whom are self-employed and living in New 

York’s underserved neighborhoods. The Citibank 

accounts — which feature enhanced electronic access, 

debit cards, no minimum balance and minimal or no 

fees — enable Grameen members to build assets and 

gain access to mainstream financial services such as 

debit cards and ATM networks. Citibank continues 

to offer the accounts beyond the pilot program and 

has opened approximately 4,000 of the accounts in 

total through March 2012. The partnership relies on a 

structured program in which micro-loan borrowers are 

encouraged to make regular, small savings deposits, 

with savings goals that are as low as $2 per week so as 

to be achievable by even very-low-income individuals. 

Citibank and Grameen America have teamed up 

to provide education and other assistance to new 

customers learning how to manage financial products. 

The program requires an investment in partnership and 

program development but can help develop longerterm, scalable and profitable relationships. Citibank 

believes that partnerships like this enable unbanked 

people to transition into mainstream banking while 

building financial capability and asset building.

Cross County Savings Bank

Middle Village, New York 

Cross County offered pilot transaction and savings 

accounts in all of its branches in New York City, 

including some in underserved areas. During the pilot, 

Cross County celebrated an important milestone: 

a new branch opening in the Bronx in a Banking 

Development District, an area the city identified as 

being underserved by financial institutions. Cross 

County focused its efforts and resources on promoting 

the new branch and its product offerings, and worked 

with local nonprofit groups and government officials 

to help establish a presence in the community. The 

bank also emphasized in-branch marketing, making 

sure that staff in all branches were fully trained on 

how and when to offer pilot Safe Accounts. Cross 

County realizes that it takes time to make inroads 

into new markets and to increase product and name 

recognition, especially among consumers who may not 

be accustomed to dealing with financial institutions. 

Cross County remains committed to offering safe 

transaction and savings accounts to benefit the residents 

and neighborhoods they serve. 
FDIC Model Safe Accounts Pilot n APRIL 2012 15

First State Bank

Union City, Tennessee

First State Bank was active in opening both transaction 

and savings accounts and found a niche market in 

new entrants to the banking system. First State’s 

pilot accountholders generally had not experienced 

banking problems in the past but rather had never had 

a banking account or banking relationship before. 

Recognizing the difficulty of marketing to an audience 

that might be more familiar and comfortable with 

alternative financial service competitors, the bank 

chose to use collaborative outreach strategies instead 

of broad, traditional marketing activities. First State 

worked with key community partners to identify and 

reach out successfully to new entrants to the banking 

system. While the bank worked with several nonprofit 

organizations, one of its most successful endeavors was 

a business partnership with temporary employment 

agencies. The agencies promoted the safe transaction 

account at orientations for new employees, who were 

required to have a bank account to accept direct deposit 

of payroll checks. First State plans to continue similar 

business partnerships, and is committed to finding 

ways to compete with local alternative financial service 

providers.

ING DIRECT

Wilmington, Deleware

ING DIRECT’s participation in the pilot allowed 

the institution to explore the feasibility of using the 

Internet delivery channel, in conjunction with email 

and direct mail marketing, to open savings accounts for 

underserved populations in targeted markets across the 

country. Because the bank’s savings account product 

requires customers to have an existing transaction 

account with a depository institution, it had a unique 

focus on customers with unrealized potential. For the 

pilot, ING DIRECT focused on the Orange Savings 

Account, their flagship product (which is consistent 

with the Template). In its effort to engage underserved 

consumers, the bank strove to demonstrate how and 

why its savings product could provide important 

benefits. ING DIRECT’s marketing emphasized that 

customers needed only $1 to open an account, and that 

accounts had no minimum balance requirement. As a 

result of the pilot, ING DIRECT reports that they have 

learned important lessons about reaching out to the 

underserved market while offering a product that can 

be beneficial to different market segments. 

Liberty Bank and Trust Company

New Orleans, Louisiana

Liberty Bank and Trust Company offered its new 

E-Cash transaction and savings accounts to consumers 

in the greater New Orleans area. The bank partnered 

with two local trade schools to provide accounts, 

financial education, and direct deposit for students. 

Liberty also offered the Safe Accounts to consumers 

as second chance accounts. Notably, the bank felt 

that their E-Cash accounts were a way to provide 

consumers with a deposit account and not have to turn 

them away. Liberty’s tellers offered Safe Accounts to 

many applicants that did not qualify for a traditional 

account. The bank found that the Safe Accounts 

performed better than its traditional accounts and was 

pleased with the higher account retention rates and 

relatively low overdraft rates. Liberty attributes this 

success to the motivation of its customers. In the bank’s 

experience, second chance customers are particularly 

motivated to have successful banking relationships 

because they do not want to be shut out of the banking 

system again. 

Pinnacle Bank

Lincoln, Nebraska

Pinnacle offered Safe Deposit transaction and savings 

accounts in its offices across Nebraska, Kansas, and 

Missouri. The bank instituted an electronic training 

program for branch staff that was quite effective. 

Pinnacle’s new accounts representatives understand 

the Safe Deposit account products and are able to 

identify potential customers that may benefit from 

access to these accounts, including consumers that had 

experienced difficulty managing bank accounts in the 

past. Pinnacle is committed to reaching underserved 

consumers in its market area and believes that these 

new customers may eventually transition to more 

traditional deposit products, providing the bank with 

new cross-selling opportunities in products like auto 

loans. Even without these opportunities, Pinnacle 

believes that these accounts are viable and sustainable. 

Moreover, Pinnacle believes that offering Safe Deposit 

transaction and savings accounts has allowed the bank 

to develop relationships with customers who they 

otherwise might have turned away. 
FDIC Model Safe Accounts Pilot

n APRIL 2012 16

South Central Bank

Glasgow, Kentucky

South Central Bank offered new transaction and 

savings accounts at its branches in Kentucky. To 

reach underserved consumers, the bank used a 

grassroots marketing campaign through community 

partnerships. South Central believed that partnerships 

with local community organizations, schools, nonprofit 

groups, and local government agencies would be the 

most effective and respectful way to connect with 

underserved consumers, with the added benefit of not 

requiring a large budget for a one-year pilot project. 

The bank received substantial interest from its potential 

partners early in the project, which led to early success 

for the bank in the form of new customers. South 

Central also learned that it needed to continue to 

engage with its partners to maintain momentum for 

the accounts and believed that their partners would 

have benefited from quarterly meetings to keep up 

enthusiasm and interest. Nonetheless, South Central 

believes that the market segments reached by this 

pilot represent an opportunity for the bank to expand 

its customer base while meeting the needs of the 

community. 

Webster Five Cents Savings Bank

Webster, Massachusetts

Webster Five offered its card-based First Step Checking 

Accounts and Passbook Savings Accounts as part of 

the pilot and will continue to offer both accounts in the 

future. The transaction account was a new product for 

the bank, and the savings account is a staple product 

that the bank offers in electronic and traditional 

passbook forms. Webster Five opened most of its First 

Step Checking Accounts as second chance accounts for 

consumers who have had difficulty managing accounts 

in the past. The bank also opened several transaction 

accounts for young adults who may have been new 

to the banking system and who did not want or need 

checks. These consumers used ATMs and point-of-sale 

terminals for most of their transactions. While some of 

these young consumers signed up for Webster Five’s 

online banking, few used the bill payment services, 

likely preferring to pay bills with their debit card or 

with money orders offered at the bank. Webster Five 

believes that the functionality and affordability of these 

accounts are important for reaching consumers.