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Banking the Underbanked Resource Directory

This directory provides useful information and resources to national banks and federal savings associations (collectively, banks) that are interested in providing financial services to underbanked consumers.

The underbanked is a general label describing individuals with little to no bank relationships. The underbanked includes individuals with

  • no bank accounts.
  • bank accounts and who regularly use nontraditional financial institutions such as check cashers and payday lenders.
  • credit profiles that limit their ability to obtain bank credit.

Some banks have identified the underbanked as a separate market segment and are dedicating resources to them. Other banks treat the underbanked as a part of an existing market segment. For example, some banks have created specialized departments to focus on this and similar segments, sometimes referred to as emerging market departments, while others incorporate the underbanked in their existing retail divisions.

The resources in this directory are organized into the following categories:

Financial Literacy Programs

Because financial literacy often is not taught in schools and homes, adults may be ill prepared to make wise financial decisions. The consequences of poor financial literacy can be compounded in underbanked communities, where residents rely on costly check-cashing, payday-loan, and other nontraditional financial services. Banks can play a constructive role in improving financial literacy in their communities by offering free financial education programs and resources. Banks can encourage their employees to volunteer as financial advisers and mentors in schools, community organizations, and churches, and in so doing, they might expand their customer base, create goodwill, and increase business opportunities.

In addition, banks supporting financial literacy initiatives may receive credit for qualified community development loans, investments, and service activities under the OCC’s  2020 Community Reinvestment Act rule. The OCC offers information on how banks may receive CRA credit. For more information, visit the CRA section of OCC.gov.

To help banks in their efforts to promote financial literacy, the OCC offers online resources, including Financial Literacy Updates, which list upcoming programs devoted to educating consumers about personal finance. The OCC's “Financial Literacy Resource Directory” has information on a variety of related topics.

Low- to Moderate-Income Communities and Minority Groups

Low- to moderate-income communities and minority groups are disproportionately represented in underbanked markets. Surveys suggest there are many reasons that underbanked individuals are unable or unwilling to open bank accounts. One reason is the perception that banks charge high fees for transactional accounts, and, therefore, the accounts are costly to maintain. Another reason is that some consumers have limited traditional transactions in their credit files to generate a robust credit score. To counter this perception, banks have been designing low-cost bank products and services for the underbanked market. These products and services include the following.

Consumer Identification Requirements for New Accounts
The 2001 USA Patriot Act outlines procedures in section 326, the Customer Identification Program (CIP), to help banks verify the identity of customers opening savings and checking accounts. The OCC explains the CIP in the spring 2009 issue of the OCC Community Developments Investments newsletter titled "Cultivating Community-Based Financial Literacy Initiatives" (PDF). This newsletter describes several banking initiatives designed to encourage immigrants to use traditional banking services. These initiatives include financial literacy programs, specialized bank products, and alternative verification methods for customers opening new accounts. One of the newsletter’s articles, "Customer Identification Requirements for New Accounts" (PDF), explains in detail the USA Patriot Act's CIP rule.

Low-Cost Bank Transactional and Savings Accounts
 

The Federal Deposit Insurance Corporation (FDIC) conducted a one-year pilot program in 2011 to evaluate the feasibility of banks offering safe, low-cost bank transactional and savings accounts for underserved consumers. The FDIC, and the nine banks that participated in the program, developed a Model Safe Account Template for designing electronic, card-based accounts with features that limit acquisition and maintenance costs. A full report of the pilot results, lessons learned, challenges faced, and other information, is available on the FDIC’s website.

Low-Cost, Small-Dollar Loans

In May 2020, the OCC and other federal banking agencies issued lending principles to encourage banks to offer responsible small-dollar loans to customers for consumer and small business purposes. The agencies recognize the important role that responsibly offered small-dollar loans can play in helping customers meet their ongoing needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income shortfalls, including during periods of economic stress, national emergencies, or disaster recoveries. Well-designed small-dollar lending programs can result in successful repayment outcomes that facilitate a customer’s ability to demonstrate positive credit behavior and transition into additional financial products.

The Pew Charitable Trusts issued a 2018 brief titled “Standards Needed for Safe Small Installment Loans From Banks, Credit Unions,” which offers guidelines for banks to follow as they develop new small-dollar loan programs in a way that provides consumer protections while enabling sustainability and scale for providers.

Financial Technology
Innovations in digital technology have brought about a variety of ways for consumers to obtain money, pay bills, manage their budgets, and check credit scores electronically. These include smartphone apps, websites, general-purpose reloadable cards, payroll cards, government benefit cards, and retail gift cards. Prepaid access programs, for example, allow consumers to add, spend, and withdraw money as needed. OCC Bulletin 2011-27, "Prepaid Access Programs: Risk Management Guidance and Sound Practices," provides banks with guidance on assessing and managing the risks associated with prepaid access programs.

Youth Savings
In November 2017, the OCC, the Board of Governors of the Federal Reserve System, the FDIC, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, and the National Credit Union Administration updated the "Guidance to Encourage Financial Institutions' Youth Savings Programs and Address Frequently Asked Questions" (PDF). The interagency guidance answers common questions, including those related to CIP requirements, that may arise as banks collaborate with schools and other community stakeholders to facilitate youth savings and financial education programs. The guidance is intended to encourage banks to develop and implement programs to expand youths’ financial capabilities and to build opportunities for the financial inclusion of more families. This effort is consistent with the “Starting Early for Financial Success” focus of the Financial Literacy and Education Commission, a body of 21 federal agencies, including the financial regulators, and the White House Domestic Policy Council.

Federal Resources

Consumer Financial Protection Bureau (CFPB)

The CFPB maintains a resource directory to help consumers make informed financial decisions.

Federal Deposit Insurance Corporation (FDIC)

EconomicInclusion.gov

This is an online clearinghouse for FDIC initiatives related to ensuring individuals' access to the mainstream banking system.

FDIC's National Survey of Unbanked and Underbanked Households

The FDIC provides information, based on census data, on the U.S. households that are unbanked or underbanked, their demographic characteristics, and their reasons for being unbanked and underbanked.

How America Banks: Household Use of Banking and Financial Services

The findings presented in this FDIC report come from the FDIC Survey of Household Use of Banking and Financial Services, a survey that the FDIC has conducted biennially since 2009, partly in response to a statutory mandate, in partnership with the U.S. Census Bureau. The most recent survey was conducted in June 2019, collecting responses from almost 33,000 households on bank account ownership, the primary methods banked households use to access their bank accounts, bank branch visits, use of prepaid cards and nonbank financial transaction services, and use of bank and nonbank credit.

Financial Literacy and Education Commission

MyMoney.gov

This website is a product of the Federal Financial Literacy and Education Commission (FLEC), whose purpose is to strengthen financial capability and increase access to financial services for all Americans. The site organizes financial education help from over 20 different federal entities. FLEC is chaired by a representative from the U.S. Department of the Treasury, and a Consumer Financial Protection Bureau representative serves as FLEC's vice chair. 

National Strategy for Financial Literacy

The FLEC established goals for the various sectors of the nation’s economy to improve individual financial well-being and financial literacy. The goals not only detail the federal government’s financial literacy priorities but also describe the government’s plans to collaborate with state, local, and tribal governments and the private sector to strengthen financial capability for all Americans.

Office of the Comptroller of the Currency

Financial Literacy Updates

HelpWithMyBank.gov

HelpWithMyBank.gov provides answers to about 250 commonly asked banking questions. Targeted for national bank customers, HelpWithMyBank.gov answers many questions common to all banking consumers; provides useful information about contacting regulators of state banks, savings associations, and other financial institutions; and includes an online complaint form for bank customers wishing to register their concerns to the OCC.

Community Developments Fact Sheet: Individual Development Accounts

Community Developments Insights: Individual Development Accounts: An Asset Building Product for Lower-Income Consumers

These publications examine IDAs as a tool for banks to encourage lower-income persons and families to save money and thus build assets for particular financial goals. The publications describe why banks offer IDAs, shows how banks are involved with IDAs, and addresses barriers to the growth of IDA products. The information was obtained from a variety of sources including financial institutions, IDA policy makers, nonprofit service providers, and program funders. Several hundred banks participate in IDA programs, which can receive positive consideration under the Community Reinvestment Act. Appendix 1 of the Insights report contains a resource guide for banks considering participating in an IDA program.

Project REACh

Project REACh promotes financial inclusion through greater access to credit and capital. REACh stands for “Roundtable for Economic Access and Change,” and the project brings together leaders from the banking industry, national civil rights organizations, business, and technology to reduce specific barriers that prevent full, equal, and fair participation in the nation’s economy.

Other Resources

Asset Coalition Toolkit for States (ACTS)

ACTS is an independent website containing tools and resources that leverage information sharing among state coalitions in the asset-building field.

Bank On

The Bank On National Advisory Board worked with community coalitions and financial institutions to develop national standards for safe, low-cost, financial transaction products and programs.

Choose to Save

Choose to Save is sponsored by the Employee Benefit Research Institute and the American Savings Education Council. This public education campaign encourages savings through all stages of life.

Financial Health Network

The network's mission is to transform the U.S. financial services marketplace to help underbanked consumers achieve financial prosperity.

Money Smart Week

Created by the Federal Reserve Bank of Chicago, Money Smart Week is an annual event during which hundreds of local communities around the country put the spotlight on existing financial literacy classes and activities and organize new ones to promote awareness of the importance of sound financial behavior.

Prosperity Now

Prosperity Now (formerly CFED) is a nonprofit organization whose mission is to empower low- and moderate-income families and communities to build and preserve assets by advancing policies and programs that help them achieve the American Dream: buying a home, pursuing higher education, starting a business and saving for the future.