Mobile devices give underbanked financial foothold

Nearly two out of three households primarily used bank tellers or online banking when accessing their accounts. These banking methods, along with ATMs, were also the primary methods underbanked households used to access their accounts, according to the 2013 FDIC National Survey of Unbanked and Underbanked Households.

Notably, underbanked households were more likely to use mobile banking devices relative to other groups: 29.2% of underbanked households used mobile devices to access their account compared to 21.7% of fully banked households.

The proportion of unbanked households declined from 8.2% in 2011 to 7.7% in 2013, while the share of underbanked households remained essentially unchanged at 20%. The decrease in the proportion of the unbanked can be explained by improving economic conditions and the changing demographic composition of households.

The survey, conducted every two years by FDIC in partnership with the Bureau of the Census, provides the banking industry and policy makers with insights and guidance on the demographics and needs of the unbanked and underbanked.

More survey results

Other key findings:

• 9.6 million households representing 25 million people were unbanked in 2013, and the 0.5 percentage point decline in the proportion of unbanked households is estimated to comprise 1.5 million people and more than half a million households.

• One in five, or 24 million households, were underbanked in 2013, consisting of an estimated 68 million people.

• 35.6% of unbanked households reported the main reason for not having an account being insufficient money to keep in an account or meet minimum balance requirements.

• 34.1% of households that recently became unbanked experienced either a significant income loss or job loss that they said contributed to becoming unbanked.

• 22.3% of unbanked households reported using a prepaid debit card in the prior 12 months, compared with 13.1% of underbanked and 5.3% of fully banked households.

• Also unchanged from 2011 is the finding that one-quarter of households have used at least one alternative financial service such as nonbank check cashing or payday loans in the past year. In all, 12% of households used an alternative service in the past 30 days, including four in ten unbanked and underbanked households.

Implications of the survey

The survey report drew three implications from the findings that could point the way toward better meeting consumers' needs:

1. Develop strategies to help households maintain or renew banking relationships through economic transitions, such as job loss.

2. Explore opportunities to deploy and market checkless checking accounts and other options to meet the transactional needs of households.

3. Integrate mobile banking initiatives with branch-based strategies in overall efforts to address consumers' needs.