In the wake of new FDIC data, financial institutions are working to expand access to banking services locally and build trust among underbanked communities
While the rate of the unbanked population in the U.S. has fallen to its lowest level, the percentage of underbanked households has ticked up to 14.2%, according to FDIC data released at the end of 2024. Being unbanked means an individual or household doesn’t have access to a bank account. Being among the underbanked, on the other hand, means that while individuals or households do have a bank account, they remain heavily reliant on alternate financial services. These alternatives can include everything from money orders to high-fee and unregulated options, like payday loans, pawn shops, or check-cashing services, along with unsecured currency like crypto.
The numbers paint a picture of improving banking access overall among the U.S. population. However, racial disparities persist across financial services at large. “About one in five Black, Hispanic, American Indian or Alaska Native, Native Hawaiian or other Pacific Islander households were underbanked,” according to Banking Dive. “That’s in contrast to one in 10 white households.” Mobile banking has filled some gaps for the underbanked, but primarily for processing transactions, not for a full range of financial services, like credit, lending, and advice. Having access to a branch is still essential to truly reducing the ranks of the underbanked.
“When asked about the barriers to banking access, 42.3% of consumers said they lacked the funds to meet minimum balance requirements,” according to American Banker. “While 15.7% said they did not trust banks.” On both fronts, banks and credit unions have opportunities to serve. Expanding credit and low fee options will make a full range of banking available to more people, and providing banking experts for advice and counsel will build trust among consumers. According to FDIC Chairman Martin J. Gruenberg. “Access to safe, affordable bank accounts is fundamental for consumers to be able to participate in and benefit from our nation’s economy.”
While branch building to reach the underbanked may take time, some financial institutions are using innovative ways to increase banking access in the community now. University Federal Credit Union (UFCU) “rolled out its mobile branch as a way to reach more people in traditionally underbanked communities,” according to the Credit Union Times. The Austin-based credit union is using the mobile branch to reach an estimated 24% of Texas unbanked or underbanked households. “Working with our community partners, we are committed to improving access to financial services for all Texans,” says Michael Crowl, UFCU president & CEO “This is a significant step towards addressing financial barriers traditionally underserved communities face.”
Other banks, like Wells Fargo, are focused on increasing trust among the underbanked. The bank is offering financial coaches and free workshops at key branches in their network, including Chicago, and Charlotte. “Those additions are part of Wells’ goal to have 50 HOPE Inside centers providing free financial education services within certain branches by the end of 2026,” according an interview with Michael Martino, head of diverse customer segments for consumer and small-business banking. Through a partnership with financial empowerment nonprofit Operation HOPE, centers are already in more than 20 cities across the country.
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