Bank On certified accounts are an important way to promote financial inclusion, according to American Bankers Association (ABA) president and CEO Rob Nichols.
Nichols made the comments during a conference hosted by the CFE Fund, which developed the Bank On account standards.
He said: “Having access to banking accounts [and] banking products is the building block—the key essential ingredient—to a secure financial future.
“If you’re out of the banking system, you’re terribly disadvantaged… There are many challenges our nation faces around economic inequality, and one of the solutions for this is to get these women and men inside the system.”
The ABA has been an advocate of the Bank On movement and is encouraging all banks to offer Bank-On certified accounts.
Features of the account include low costs, online bill pay capabilities, no overdraft fees and transaction capabilities.
According to CFE Fund, there are now more than 160 Bank On nationally certified accounts offered by banks and credit unions, representing 52% of the domestic deposit market.
At the conference, Nichols also said that Bank On accounts are an “ideal solution” for addressing the estimated seven million Americans who remain underbanked.
He added that these accounts are better than turning to government solutions, such as central bank digital currencies, postal accounts, or retail accounts at the Federal Reserve, which he said remain untested.
“We’ve got a great solution that’s working bring [consumers] into the banking system with a product that makes sense for them, rather than create a separate government-run banking system to address inclusion,” said Nichols. “Creating this secondary system doesn’t make any sense to us.”
Rep. Ed Perlmutter who also spoke at the event acknowledged that there has been growing interests in these proposals among lawmakers but emphasized that “we have the Bank On initiative [that] is really tackling this. It isn’t something that is just an idea—it’s occurring, and it’s growing.”
He added that the initiative has benefits for both banks and consumers. “It’s helping both sides of the ledger—it helps the individual and the individual’s family, but it also helps the financial services side to continue to grow their deposit base and their customer base.”
Last month, Zions Bank achieved Bank On certification from the Cities for Financial Empowerment Fund.
In July, the Bank On Initiative hit a landmark as its coverage grew in the US, as 40% of US bank branches provide access to a Bank On certified account.