fdic 2011 household and bank surveys for ct · *note: numbers arebased on percent of the...
TRANSCRIPT
July 23, 2013
1
Overviewofthe2011FDICNationalSurveyofUnbankedandUnderbankedHouseholdsIncludingResultsforConnecticut
Followedby
2011FDICNationalSurveyofBankEffortstoServetheUnbankedandUnderbanked
FDIC Community Affairs
Boston Area Office
The Boston Community Affairs staff acknowledges the members of the Unbanked Study Team: Susan Burhouse, Sarah Campbell, David Chapman, Keith Ernst, Ryan Goodstein, Leneta Gregorie, Yazmin Osaki, Luke Reynolds and Sherrie Rhine, and Eric Robbins. Ms. Osaki was especially helpful by providing the presentation template, additional data, and guidance.
GeographiesThis presentation reflects multiple geographies:
• The entire U.S.
• State of Connecticut
• Three Metropolitan Statistical Areas* (“MSAs”) –• Bridgeport‐Stamford‐Norwalk (“Bridgeport MSA”)
• Hartford‐West Hartford‐East Hartford (“Hartford MSA”)
• New Haven MSA
MSA‐level data should be considered in light of the limited sample size of certain data points (illustrated by the tables in slides 21 and 24). The Community Affairs staff recommends that the information provided below be reviewed in conjunction with the Survey Report and Appendix (see:
http://www.economicinclusion.gov/surveys/2011household/).
* Metropolitan…statistical areas…are geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics…A metro area contains a core urban area of 50,000 or more population… Each metro… area consists of one or more counties and includes the counties containing the core urban area, as well as any adjacent counties that have a high degree of social and economic integration (as measured by commuting to work) with the urban core.
(source: http://www.census.gov/population/metro/)2
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Content
• Background
• Banking Status
• Account Ownership
• Use of Alternative Financial Services
• Implications and Conclusions
3
Background• Objectives and statutory mandate
• FDIC Household Survey• Administered in June 2011 as a supplement to the Census CPS to nearly 45,000 households (84% of CPS respondents)
• Released September 2012
• Designed to yield estimates of the number of unbanked and underbanked households; their demographic characteristics, and the reasons why they are unbanked and underbanked
• First survey administered in January 2009 and released in December 2009
• FDIC Bank Survey• Results released December 2012 4
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5
FDIC Household Survey Highlights
RevisedUnderbankedDefinition
Alternative Financial Service (AFS)
Timing of Use2009 2011
Non-Bank Money OrdersNon-Bank Check CashingPayday LendingPawn ShopsRent-to-Own
Used at least once or twice a year
Used in the last
year
Refund Anticipation Loans (RALs)
Used in the last 5 years
Non-Bank Remittances Not included6
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4
DistributionofHouseholdBankingStatus:U.S.andCT
7
68.8% 77.3%
20.1%15.2%
8.2% 5.3%
2.9% 2.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
US Connecticut
Banked, butUnderbanked StatusUnknown
Unbanked
Underbanked
Fully Banked
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
DistributionofHouseholdBankingStatus:CTMSAs
8
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
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5
2009– 2011ChangesinUnbankedRates:U.S.,CT,andMSAs
9
7.6
5.3
4.1
5.1
6.6
8.2
5.3
1.6
5.34.8
0
1
2
3
4
5
6
7
8
9
US Connecticut Bridgeport MSA Hartford MSA New Haven MSA
2009 2011
Percentage of Households
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
2009‐2011ChangesinAlternativeFinancialServices(AFS)UseAmongBankedHouseholds:U.S.,CT,andMSAs
10
17.4%
13.6%
10.8%
13.4%
16.0%
18.3%
12.7%
8.9%
12.7%
14.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
US Connecticut Bridgeport MSA Hartford MSA New Haven MSA
2009 2011
Percentage of Households
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
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6
11
Unbanked and Underbanked Rates by Demographic Groups
BankingStatusofSelectGroups:U.S.
Percent Percent Percent
Select Demographic Groups Unbanked Underbanked Fully Banked
All households 8.2 20.1 68.3
Blacks 21.4 33.9 41.6
Hispanics 20.1 28.6 48.7
Foreign-born noncitizens 22.2 28.9 45.8
Unemployed householder 22.5 28.0 47.5
Income below $15,000 28.2 21.6 47.6
Unmarried female family households 19.1 29.5 48.4
Under age 24 householder 17.4 31.0 49.712
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
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7
UNbankedHouseholdsbyRegionandState
13
UNDERbankedHouseholdsbyRegionandState
14
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8
15
Household Demographic Composition by Banking
Status
HouseholdCompositionbyBankingStatus
• There are stark differences between the unbanked and banked
• Along some dimensions, the underbanked seem to be a blend of the unbanked and fully‐banked populations: race, age, family type
• Along other dimensions, the underbanked seem much more similar to the fully‐banked: employment and income
16
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9
17
UNbanked Households
Bar Graphs: 24 whites / 73 total unbanked population = 32.9%
Fractions: 24 whites / 1072 total white population = 2.3% or 1/45
RacialDistributionofUnbanked:U.S.andCT2011
18
34.7% 30.1% 33.3%
28.0% 35.6%
51.4%
33.7% 32.9%
15.3%
1.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Other
White
Hispanic
BlackUS CT ‘11
1/6 Black
1/4 Hispanic
1/45 White
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
CT2011Results:
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10
21.5%13.5% 16.2%
8.2%
6.8%9.5%
30.1%
24.3%
37.8%
40.1%
55.4%
36.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Nonfamily HH
Female HOH
Male HOH
Married Couple
HHTypeDistributionofUnbanked:U.S.andCT2011
19*Nonfamily HH consists of a householder
living alone (a one‐person household) or where the householder shares the home exclusively with people to whom he/she is not related
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
2/23 Nonfamily
1/8 Female
1/9Male
1/69 Married
CT2011Results:
AgeDistributionofUnbanked:U.S.andCT2011
20
37.3% 39.7%50.7%
20.2%24.7%
17.8%
20.3% 11.0%9.6%
12.2%11.0% 8.2%
10.1% 13.7% 13.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
65 or older
55 ‐ 64
45 ‐ 54
35 ‐ 44
15 ‐ 34*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
1/8 65+
5/74 55‐64
1/40 45‐54
1/32 35‐44
1/8 15‐34
CT2011Results:
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11
AgeDistributionofUnbanked:MSAs2011
21
62.6%20.9%
16.5%
Bridgeport MSA
31.7%
27.7%
12.2%
18.7%
9.7%
Hartford MSA
68.2%
14.5%
17.3%
New Haven MSA
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
Note: Some categories in the pie charts have missing information because the sample size was too small to make an accurate estimate.
IncomeDistributionofUnbanked:U.S.andCT2011
22
55.8%49.3% 52.7%
26.1%28.8% 21.6%
12.4%13.7%
6.8%
4.4% 2.7%
6.8%
1.3% 5.5%
1.4%
10.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Unknown
At least $75,000
$50,000 ‐ $75,000
$30,000 ‐ $50,000
$15,000 ‐ $30,000
under $15,000
1/141 at least $75
2/247 $50 ‐ $75
1/20 $30 ‐ $50
1/9 $15 ‐ $30
2/9 under $15
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
CT2011Results:
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12
EducationDistributionofUnbanked:U.S.andCT2011
23
37.4% 40.3% 37.0%
38.1%38.9% 43.8%
20.3% 15.3% 15.1%
4.2% 5.6% 4.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
College Degree
Some College
HS Degree
No HS Degree
4/523 College
1/28 Some College
5/72 High School
2/9 No High School
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
CT2011Results:
HomeownershipDistributionofUnbanked:U.S.andCT2011
2422.7%
5.5% 8.2%
77.3%
94.5% 91.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Non‐Homeowners
Homeowners
1/244 Homeowners
1/9 Non‐Homeowners
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
CT2011Results:
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13
25
UNDERbanked Households
Bar Graphs: 24 whites / 73 total unbanked population = 32.9%
Fractions: 24 whites / 1072 total white population = 2.3% or 1/45
RacialDistributionofUnderbanked:USandCT2011
2622.5% 27.05% 24.87%
16.2%14.49% 16.93%
56.0%56.04% 51.85%
2.42% 6.35%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Other
White
Hispanic
Black*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
3/7 Black
1/4 Hispanic
1/9 White
CT2011Results:
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14
HHTypeDistributionofUnderbanked:U.S.andCT2011
27
44.1% 48.08%
31.75%
6.9% 2.88%
6.35%
19.0% 21.15%
26.46%
29.9% 27.88%35.45%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Nonfamily HH
Female HOH
Male HOH
Married Couple*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
1/8 Nonfamily
2/7 Female
1/8 Male
1/7 Married
CT2011Results:
AgeDistributionofUnderbanked:U.S.andCT2011
28
28.7%18.75%
33.68%
20.3%
19.71%
15.26%
22.1%
26.92%
21.58%
16.8%19.71% 13.16%
12.1% 14.90% 16.32%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
65 or older
55 ‐ 64
45 ‐ 54
35 ‐ 44
15 ‐ 34*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
1/9 65+
1/6 55‐64
1/6 45‐54
1/6 35‐44
1/6 15‐34
CT2011Results:
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15
AgeDistributionofUnderbanked:MSAs2011
29
25.7%
14.6%
19.4%
31.8%
8.5%
Bridgeport MSA
17.2%
20.1%
27.2%
17.2%
18.3%
Hartford MSA
25.6%
31.5%
31.7%
11.2%
New Haven MSA
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
Note: Some categories in the pie charts have missing information because the sample size was too small to make an accurate estimate.
IncomeDistributionofUnderbanked:U.S.andCT2011
3017.5% 15.87% 15.26%
23.3%19.23% 16.32%
23.9%
16.35%
10.53%
17.1%
18.27%27.37%
18.3%
30.29%
16.32%
14.21%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Unknown
At least $75,000
$50,000 ‐ $75,000
$30,000 ‐ $50,000
$15,000 ‐ $30,000
under $15,000*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
1/9 at least $75
1/6 $50 ‐ $75
1/6 $30 ‐ $50
1/5 $15 ‐ $30
1/5 under $15
CT2011Results:
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16
EducationDistributionofUnderbanked:U.S.andCT2011
3114.5% 14.90% 13.68%
31.6%37.50% 35.26%
31.7%25.48% 27.89%
22.2% 22.12% 23.16%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
College Degree
Some College
HS Degree
No HS Degree*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
8/91 College
1/6 Some College
1/5 High School
1/4 No High School
CT2011Results:
HomeownershipDistributionofUnderbanked:U.S.andCT2011
32
52.0% 55.29%
43.16%
48.0% 44.71%
56.84%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
CT '09
Non‐Homeowners
Homeowners
*Note: Numbers are based on percent of the unbanked/underbanked/fully banked population that is in the specific demographic group(i.e., 34.7% of the unbanked population is black)
1/8 Homeowners
1/4 Non‐Homeowners
CT2011Results:
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17
PreviousBankingStatus:U.S.,CT&MSAs2011
33
3.7
2.0
0.8
2.2
4.0
4.4
3.1
0.8
3.0
2.4
0
1
2
3
4
5
6
7
8
9
U.S. Connecticut Bridgeport MSA Hartford MSA New Haven MSA
Never Banked Previously BankedPercentage of Households
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
MainReasonHouseholdsareUnbanked: U.S.2011
343.5
14.8
0.7
1.4
1.1
9.5
7.1
33.2
26.0
8.2
5.5
15.6
3.5
11.9
0.2
1.5
1.5
4.0
4.0
7.1
7.6
32.8
0 5 10 15 20 25 30 35
Do Not Know/ Refused
Other/ None of the Above
Banks do not offer the needed products or services
Banks do not have convenient hours or locations
Do not know how to open or manage an account
Previously had an account but the bank closed it
Bank account fees or minimum balance requirementsare too high
Don't like dealing with and/or don't trust banks
Can't open an account due to ID, credit, or bankinghistory problems
Do not need or want an account
Do not have enough money
Never-Banked
Previously Banked
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
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18
UnbankedHouseholds’LikelihoodofOpeningAccount:U.S.
35
21.7
39.0
22.226.0
18.9
29.4
6.6
16.1
24.4
48.0
20.4
13.5
0
10
20
30
40
50
60
Very likely Somewhat likely Not too likely Not likely at all
Per
cen
tage
of
Unb
anke
d H
ouse
hol
ds
All Unbanked Previously Banked Never-Banked
Note: Percentages are based on 9.9 million unbanked households
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
UnbankedHouseholds’ReasonsforWantingtoOpenanAccount:U.S.2011
36
1.3
7.0
0.3
4.2
10.0
22.6
25.7
28.8
1.6
3.7
0.6
1.6
4.4
26.2
31.0
30.8
0 10 20 30 40 50 60
Unknown
Other
To send money to family and friends
To be able to apply for a loan or mortgage
To take advantage of direct deposit of paychecks
To save money for the future
To secure your money
To write checks and pay bills
Percentage of Unbanked Households
Never-Banked
Previously Banked
Note: Percentages are based on 5.3 million never-banked and 4.4 million previously-banked households.
**Note: Numbers are based on percent unbanked/underbanked/fully banked in the specific demographic group(i.e., 21.4% of blacks are unbanked)
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19
TypesofBankAccountsOwnedbyUSHouseholds
37
AccountOwnership:U.S.andCT2011
38
Unbanked, 8.2
Banked but Unknown Type,
1.5
Checking and Savings
Accounts, 67.2
Savings Account Only,
2.0
Checking Account Only,
21.1
Notes: Percentages are based on 120.4 million U.S. households. Percentages may not sum to 100 because of rounding.
Checking & Savings 75%
Savings Only 2%
Checking Only 17%
Banked ‐ Account Unknown
1%UNBanked
5%
U.S.
Connecticut
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20
AccountOwnership:MSAs2011
39
Checking & Savings 82%
Savings Only 2%
Checking Only 13%
Banked ‐ Account Unknown
1%
Unbanked 2%
Bridgeport MSA
Checking & Savings 75%
Savings Only 2%
Checking Only 17%
Banked ‐ Account Unknown
1%
Unbanked 5%
Hartford MSA
Checking & Savings 70%
Savings Only 3%
Checking Only 22%
Banked ‐ Account Unknown
0%
UNBanked 5%
New Haven MSA
AccountOwnershipbyIncome:U.S.2011
40
65.9
83.5
91.995.7 97.9
37.4
56.3
69.8
80.5
89.3
0
10
20
30
40
50
60
70
80
90
100
Less than$15,000
Between$15,000 and
$30,000
Between$30,000 and
$50,000
Between$50,000 and
$75,000
At Least$75,000
Pe
rcen
tage
of H
ouse
hold
s
Has Checking Account Has Savings Account
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21
41
Use of Alternative Financial Services
AFSConsideredintheSurvey
• Households were asked if they had ever used the following AFS and if so, whether they were used in the last year. For some AFS households were whether they had been used in the last 30 days
• Transaction AFS: • Non‐bank money orders• Non‐bank check‐cashing services• Non‐bank remittances
• Credit AFS: • Payday lending• Pawn shops• Refund anticipation loans (RALs)• Rent‐to‐own agreements
42
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22
TimingofAFSUse:US, CTandMSAs2011
4325.4
17.514.1 15.8
20.0
17.4
13.2
9.4
13.5
20.8
54.3
67.1
75.468.3
55.9
2.9 2.2 1.2 2.4 3.4
0
10
20
30
40
50
60
70
80
90
100
U.S. Connecticut Bridgeport MSA Hartford MSA New Haven MSA
Unknown
Never Used
Used but Not in thelast 12 months
Used in the last 12months
Percentage of Households
ReasonsHouseholdsUseAFS–TransactionProducts:U.S.2011
44
Non‐bank Money Orders Non‐bank Check Cashing
Notes: Percentages based on unbanked and underbanked households that have ever used each product. Percentages may not sum to 100because of rounding.
Unbanked Underbanked
0.9
5.2
2.3
27.3
3.8
2.0
19.4
39.1
0.9
9.3
0.4
1.7
2.5
2.5
28.0
54.7
0 10 20 30 40 50 60
Don't Know/ Refused
Other
Do not trust banks
Don't have a bank account
The place feels more comfortable than a bank
Banks do not sell money orders
Banks charge more for money orders
The place to purchase money orders is moreconvenient
1.9
4.2
1.6
2.5
2.4
1.9
6.6
38.9
11.3
28.7
1.1
9.6
0.9
1.0
1.6
2.1
3.4
10.1
18.4
51.8
0 10 20 30 40 50 60
Don't Know/ Refused
Other
The place to cash checks asks for fewer IDs
Do not trust banks
Banks don't cash checks
Feel more comfortable than at a bank
Bank charges more to cash checks
Don't have a bank account
To get money faster
The place is more convenient
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23
ReasonsHouseholdsUseNon‐bankRemittances:U.S.2011
45
2.9
2.7
29.5
8.4
3.7
6.9
19.2
25.0
10.5
0.7
1.8
5.1
9.4
13.0
25.0
1.71.3
33.2
0 10 20 30 40 50 60
Don't Know/ Refused
Other
Do not trust banks
Don’t have a bank account
The place to give or send money feels morecomfortable than a bank
Banks don’t send money abroad
A bank charges more to send money abroad
The money gets there faster
The place to give or send money has moreconvenient hours or location
Underbanked
Unbanked
Notes: Percentages based on 1.2 million unbanked households and 4.4 million underbanked households that have ever used non-bank remittances. Percentages may not sum to 100 because of rounding.
ReasonsHouseholdsUseAFS–CreditProducts:U.S.
46
Payday Lenders Pawn Shops
Notes: Percentages based on unbanked and underbanked households that have ever used each product. Percentages may not sum to 100because of rounding.
Unbanked Underbanked
0.3
4.1
2.2
3.1
10.1
12.8
26.8
40.6
1.0
9.3
2.4
0.6
10.0
19.2
15.6
41.8
0 5 10 15 20 25 30 35 40 45
Don't Know/ Refused
Other
More comfortable at a pawn shop than at abank
Do not trust banks
The pawn shop is more convenient
Banks don't have small loans
Don't qualify for a bank loan
Easier to get money from pawn shop thanqualify for bank loan
1.9
6.5
4.1
0.6
9.8
25.2
17.6
34.2
1.9
0.3
1.7
13.0
13.6
19.7
42.3
7.4
0 5 10 15 20 25 30 35 40 45
Don't Know/ Refused
Other
Do not trust banks
Payday loan service feels more comfortablethan a bank
The payday loan place is more convenient
Don't qualify for bank loan
Banks don't make small-dollar loans
Easier to get a payday loan than to qualify fora bank loan
July 23, 2013
24
ReasonsHouseholdsNeedAFSCreditFunds:U.S.
47
3.4
7.5
0.1
0.9
1.6
4.3
9.5
19.1
53.6
4.3
13.8
0.6
2.5
2.2
4.7
11.8
17.1
43.0
0 10 20 30 40 50 60
Don't Know/ Refused
Other
For legal expenses
For medical, dental or death expenses
For school or childcare expenses
For special gifts or luxuries
For house or car repairs or to buy an appliance
To make up for job loss or decrease in income
For basic living expenses
Unbanked Underbanked
Notes: Percentages based on 1.6 million unbanked households and 5.6 million underbanked households that have ever used credit AFS. Percentages may not sum to 100 because of rounding.
48
Implications(IllustratedbyU.S.– leveldata)
July 23, 2013
25
Implication1• Understanding segments better might increase the efficacy of economic inclusion strategies
• E.g., unbanked Hispanic households use AFS more actively than any other racial ethnic group (52% used AFS in the last 30 days), but 30% use no AFS
49
Implication2• Having a bank account does not guarantee long term participation in the banking system
• Half of all unbanked households had an account previously
• Nearly half (48.2 percent) of these report they are likely to open another
• Almost one‐quarter of fully banked households used AFS in the past
50
July 23, 2013
26
Implication3• Experience with banks appears to have more positive perceptions of having an account and rely less on AFS
• E.g., unbanked households that previously had an account are more likely to see value in being in the banking system:
• More likely to open an account
• Less likely to say “I don’t want or need an account”
51
Implication4• Banks might need to more clearly demonstrate the value of an account to AFS users
• AFS users perceived non‐bank services to be more convenient, faster, less expensive, or to present lower barriers to qualification
• E.g., mobile technologies that allow remote deposit capture might alter check cashing equation
52
July 23, 2013
27
SummaryFindings– U.S.• Opportunity to increase banking engagement
• 8.2 percent of households are unbanked (0.6 percentage point increase from 2009)
• 20.1 percent are underbanked
• Opportunity to increase savings account ownership• 29.3 percent of households do not have a savings account (10.3 percent do not have a checking account)
• A sizeable portion of households use AFS• One quarter of households have used AFS in the last year (10 percent have used 2 or more AFS)
• 12 percent have used AFS in the last 30 days (40 percent of unbanked and underbanked)
53
Boston Alliance on Economic Inclusion
July 23 2013
Timothy DeLessio
54
Members of the Unbanked Study Team: Susan Burhouse, Sarah Campbell, David Chapman, Keith Ernst, Ryan Goodstein, Leneta Gregorie, Yazmin Osaki, Luke Reynolds, Sherrie Rhine, and Eric Robbins.
July 23, 2013
28
Objectives
• Identify and quantify the extent to which insured depositories reach out to, serve, and seek to meet the banking needs of unbanked and underbanked individuals and households.
• Identify challenges affecting the ability of insured depository institutions to serve unbanked and underbanked individuals and households.
• Identify strategies that depositories used to offer financial products and services to unbanked and underbanked individuals and households.
55
• The Bank Survey was voluntary and consisted of an Internet‐based questionnaire administered to a nationally representative random stratified sample of 707 retail bank headquarters, with 567 banks (80 percent) responding.
• Through the survey design, banks are grouped into one of three asset size categories:
• the largest 25 banks (with assets greater than $38 billion)
• smallest institutions (with assets less than $1 billion)• midsize banks (with assets between $1 billion and $38
billion)
• Internet‐based survey was administered from November2011 through February 2012.
56
July 23, 2013
29
In a few instances, Connecticut banks were reviewed separately based on information provided by each bank’s specific website. Roughly 32 banks with headquarters in Connecticut were included in the study. This was conducted by members of FDIC’s Community Affairs Staff in July 2013.
57
58
July 23, 2013
30
Four out of ten banks develop products and services for underserved consumers.
• Almost 43 percent of banks were actively involved in developing products and services for underserved consumers.
59
Banks see
community
partnerships as
important strategies
to reach
underserved
consumers.
60
TV or radio advertising, 6
Print advertising, 29
Email or social media marketing, 1
Direct mail, 8
Billboard advertising, 6
Community Outreach Collaborations, 39
Other, 10
July 23, 2013
31
Automated telephone banking, multilingual staff, and off‐premise ATM locations were the most frequently chosen retail strategies.
61
30
62
28
8
43
37
38
40
10
0 20 40 60 80
Other
Automated (IVR)Telephone Banking
Mobile (Cell Phone)Banking
Online (Internet)Banking
Multilingual StaffAvailable
Extended Banking Hours
Non‐Traditional BranchFormat/Design
Off‐Premise ATMs inRetail Establishments
Non‐Traditional Location
62
July 23, 2013
32
63
15 16 17
42
6
0
5
10
15
20
25
30
35
40
45
Percentage of Banks
Note: Proportions are calculated based on all banks where balance requirements are for accounts where paycheck direct deposit is not in use. No respondents reported a minimum opening balance of between $50 and $100.
United States
12
4
10
32
1
0
2
4
6
8
10
12Number of Banks
Connecticut
64
65
10
22
72
817
0
10
20
30
40
50
60
70
80
$0 $1 to $3 > $3 $0 $1 to $3 > $3
Monthly Maintenance Feewithout Direct Deposit
Monthly Maintenance Feewith Direct Deposit
Percentage
of Ban
ks
United States
1
24
3 47
25
0 00
5
10
15
20
25
30
Unknown $0 $1 to $3 > $3 Unknown $0 $1 to $3 > $3
Monthly Maintenance Feewithout Direct Deposit
Monthly Maintenance Feewith Direct Deposit
Connecticut
Number of Ban
ks
July 23, 2013
33
The median charge for overdraft payments and on checks and other items rejected for nonsufficient funds were both $28.
• In the large majority of cases, banks charged the same amount for overdraft payments or when items were rejected due to nonsufficient funds.
65
Two out of ten banks offered a “second chance” account to individuals that do not qualify for a basic checking account.
• The survey found that 21 percent of banks offered a “Stepping Stone” or “Second Chance” account to individuals not qualified for conventional accounts.
66
July 23, 2013
34
Few banks offered a card‐based “checkless” checking account as their most basic, entry level account.
• Among all banks, 21 percent offered electronic (card‐based) accounts as their most basic transaction account product.
• Fewer—less than 1 percent of banks—offered a strictly card‐based, electronic account (i.e., an account that does not allow at least some paper checks to be written).
67
Banks required a median minimum initial deposit of $100 to open a basic savings account, though most banks did not charge a monthly maintenance fee if minimum average balance requirements were met.
• The median minimum average balance to avoid a monthly fee was $100. If the minimum average balance requirement was not met, the median monthly maintenance fee was $2.50.
• Connecticut: The median minimum average balance to avoid a monthly fee was $200. If the minimum average balance requirement was not met, the median monthly maintenance fee was $2.
68
July 23, 2013
35
More than eight out of ten banks offered specialty savings products, such as youth savings accounts.
• A majority of banks (87 percent) offered at least one specialty savings products.
69
82
41
94
87
0
10
20
30
40
50
60
70
80
90
100
Youth SavingsAccounts
Specialized SavingsClubs
Workplace‐BasedSavings
IndividualDevelopmentAccounts (IDAs)
At Least OneSpecialized Savings
Products
Percentage
of Ban
ks
Most banks accepted non‐traditional forms of identification to open accounts.
• A majority of banks accepted a non‐US passport or some other nontraditional form of identification (ID) from prospective customers.
70
58
40
73
83
0
10
20
30
40
50
60
70
80
90
Non‐US Passport Other Foreign ID Individual TaxpayerID Number (ITIN)
Foreign Passport,Other Foreign ID, or
ITIN
Percentage
of Ban
ks
According to an article published in 2007 by Fox News, New Haven CT is the very first city to offer identification cards to illegal immigrants. These cards allow immigrants to "open bank accounts and use other services that my be unavailable without driver's licenses or state‐issued IDs.“ (Elm City ID Card)
July 23, 2013
36
Most banks offered check‐cashing, bank checks, money orders, and remittances for existing accountholders, but not for others.
71
7168
86
22
57
68
47
33 35
9 9 11
0
10
20
30
40
50
60
70
80
90
100
Cashing PayrollChecks
Money Orders Bank or OtherOfficial Checks
In‐Person Third‐Party Bill Pay
InternationalRemittances
DomesticRemittances
Percentage of Banks
Basic/Entry‐Level Accountholders Noncustomers
Eight out of ten banks offered small
(under $2,500)
unsecured personal
loans.
72
43
53
4
0
10
20
30
40
50
60
No Minimum $1 to $2,500 More than $2,500
Percentage
of Ban
ks
July 23, 2013
37
Banks offering small dollar loans tended to do so with repayment terms of 90 days or longer, with annualized rates at or below 36 percent, and with loan approvals in less than 24 hours.
73
81
89
92
74
76
78
80
82
84
86
88
90
92
94
Repayment Period90+ Days
APR of 36 Percentor Less
Streamlined ApplicationProcess
Percentage of Banks
74
July 23, 2013
38
Eight out of ten banks reported providing free counseling to underserved consumers.
• Free counseling was the most frequently used and highly rated financial education and outreach activity targeted to unbanked and underbanked consumers.
• The most common locations were K-12 schools, with 74percent of banks providing financial education and outreach activities at these sites.
75
76
4851
56
81
0
10
20
30
40
50
60
70
80
90
Teach Basic FinancialEducation Topics
Funding to CommunityPartners
Provide TechnicalExpertise
Free Counseling
Percentage of Banks
July 23, 2013
39
77
3330
74
11
53
23
1
41
0
10
20
30
40
50
60
70
80
90
100
PublicFairs/Gatherings
Workplaces K‐12 Schools Government Sites Bank Branches VocationalSchools/Colleges
MilitaryInstallations
Nonprofit/Community
Organizations
78
July 23, 2013
40
About one‐third of banks identified fraud as the largest perceived major business‐related challenge for banks in serving the underserved.
79
17
28
14
25
42
39
47
39
28
16
32
24
0 10 20 30 40 50
Underwriting
NonbankCompetition
Fraud
Profitability
Major Obstacle Minor Obstacle Not an Obstacle
* The proportion of banks responding to each challenge does not sum to 100% because don’t know or non‐responses are excluded from the chart.
Thirty percent of banks reported that consumers’ lack of understanding of financial products and services was a major product‐related challenge.
80
26
19
40
10
30
55
37
42
43
45
19
18
6
31
12
0 20 40 60
Effective ProductMarketing
Lack of Customer Demand
Lack of Familiarity withConsumer Needs
Lack of ConsumerUnderstanding
Product Development
Major Obstacle Minor Obstacle Not an Obstacle
* The proportion of banks responding to each challenge does not sum to 100% because don’t know or non‐responses are excluded from the chart.
July 23, 2013
41
One in three banks (35%) cited regulatory requirements as major obstacles in serving unbanked and underbanked consumers and an additional 30% cited them as a minor obstacle.
81
16
21
16
11
23
41
43
49
48
30
20
35
34
40
35
0 10 20 30 40 50 60
Third‐Party Risk
Fair Lending/Compliance Risk
BSA/Anti‐Money Laundering
Customer ID
Regulatory Environment
Major Obstacle Minor Obstacle Not an Obstacle
* The proportion of banks responding to each challenge does not sum to 100% because don’t know or non‐responses are excluded from the chart.
Each group has some relative strengths to draw on in their efforts to meet the needs of underserved consumers, including the following examples:
• The largest banks tended to have lower initial deposit requirements on basic checking and savings accounts and accepted a broader range of foreign identification for account opening.
• Small and midsize banks were more likely not to charge maintenance fees on basic checking and savings accounts, had lower required account balances to avoid certain fees, and charged lower fees when they applied.
• The largest banks were more likely to engage in a greater range of educational and outreach activities.
• The largest banks were more likely to report actively marketing products or services customized to the needs of the unbanked and underbanked and to offer a wider array of auxiliary products and services.
• Small and midsize banks were more likely to make unsecured personal loans in amounts under $2,500, to charge less on the auxiliary products and services they offered, and to make funds available on the same day when cashing checks.
82
July 23, 2013
42
1. Expand Offerings of Basic, Low-Cost Checking and Savings Deposit Accounts
2. Offer Additional Transaction Services to Underserved Households, Including Noncustomers
3. Enhance Small-Dollar Loan Product Marketing
4. Utilize Partnerships with Community Organizations to Promote Checking and Savings Account Ownership
5. Consider Expanding Retail Strategies to Build Relationships with unbanked and Underbanked Consumers
83
• Executive Summaryhttp://www.fdic.gov/unbankedsurveys/2011survey/2011execsummary.pdf
• Full Reporthttp://www.fdic.gov/unbankedsurveys/2011survey/2011report.pdf
• More information about the FDIC’s economic inclusion efforts are available at
http://www.economicinclusion.gov/
84
July 23, 2013
43
85
Tim DeLessio, Community Affairs Officer(781) 794‐[email protected]
Paul Horwitz, Community Affairs Specialist (781) 794‐[email protected]
Kip Child, Community Affairs Specialist(781) 794‐[email protected]
Contacts: