The 2015 household survey results show that more than one in four households (26.9 percent) are either unbanked or underbanked, conducting some or all of their financial transactions outside of the mainstream banking system. Many of these households rely on alternative financial services (AFS) providers, while others use cash or other financial arrangements.
2015 Survey Results
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- 2015 Executive Summary - PDF
- 2015 Report - PDF
- 2015 Appendix Tables - PDF
- 2015 Technical Notes and Survey Revisions - PDF
- 2015 Instrument - PDF
Key Findings and Implications from the 2015 Survey
- 7.0 percent of U.S. households were unbanked in 2015. This proportion represents approximately 9.0 million U.S. households composed of 15.6 million adults and 7.6 million children.
- 19.9 percent of households in the U.S. were underbanked in 2015, meaning that the household had a bank account but also obtained a financial service or product outside the banking system. This proportion represents approximately 24.5 million U.S. households composed of 51.1 million adults and 16.3 million children.
The unbanked rate in 2015 was down 0.7 percentage points from 2013 (7.7 percent) and was lower than in any of the prior years of the survey.
- Approximately half of the decline in the unbanked rate from 2013 to 2015 can be attributed to improvements in the socioeconomic circumstances of U.S. households. After accounting for these changes, the remaining decline in the unbanked rate across years was statistically significant.
About one in five U.S. households (20.9 percent) had income that varied somewhat or a lot from month to month (over the past 12 months).
- Unbanked and underbanked rates were higher for households with volatile income.
- Even among households with higher levels of income, unbanked and underbanked rates were higher when that income was volatile.
- 55.8 percent of unbanked households thought that banks were not at all interested in serving households like theirs, compared to 16.6 percent of underbanked households and 12.0 percent of fully banked households.
Use of online and mobile banking to access accounts increased substantially from 2013 to 2015, while use of bank tellers decreased.
- Among banked households that accessed their accounts, use of online banking grew from 55.1 percent in 2013 to 60.4 percent in 2015, and use of mobile banking increased from 23.2 percent in 2013 to 31.9 percent in 2015.
- Use of bank tellers fell from 78.8 percent in 2013 to 75.5 percent in 2015. Bank teller use remained prevalent, particularly among lower-income households, less-educated households, older households, and households located in rural areas.
Prepaid card use in the past 12 months increased from 7.9 percent in 2013 to 9.8 percent in 2015. Consistent with earlier survey results, use of prepaid cards was most prevalent among unbanked households.
- 27.1 percent of unbanked households used prepaid cards in 2015, compared to 15.4 percent of underbanked households and 6.9 percent of fully banked households.
56.3 percent of households saved for unexpected expenses or emergencies in the past 12 months. Unbanked households saved at a much lower rate than underbanked and fully banked households.
- 20.2 percent of unbanked households saved, versus 55.2 percent of underbanked households and 60.0 percent of fully banked households.
- For unbanked households that saved, the most frequently chosen methods were in the home, or with family or friends, and prepaid cards. For underbanked and fully banked households that saved, the most frequently chosen methods were savings accounts and checking accounts.
Most households had bank credit (credit card or personal loan or line of credit from a bank), though a significant share of households used nonbank credit.
- 67.9 percent of households had bank credit, and 63.8 percent of households only had bank credit.
- 8.2 percent of households used nonbank credit. About half of these households had a mix of bank and nonbank credit (4.0 percent), and the other half (4.1 percent) only had nonbank credit.
- The remaining 28.0 percent of households did not use any of the credit products asked about in the survey.
Most unbanked households went outside the banking system to pay bills and receive income in a typical month. Underbanked households used banks extensively for this purpose, although they also widely used other methods, particularly for bill pay.
- A majority (62.3 percent) of unbanked households used cash to pay bills in a typical month, and 35.5 percent used nonbank money orders. The most prevalent method of receiving income among unbanked households was paper check or money order (42.1 percent), followed by cash (22.8 percent).
- Among underbanked households, 92.7 percent paid bills using a bank, primarily by electronic payment from a bank account (62.3 percent), personal check (55.3 percent), or debit card (56.2 percent). Other methods used by underbanked households to pay bills included cash (27.7 percent) and nonbank money orders (25.6 percent). Overall, 54.3 percent of underbanked households paid bills using only banks.
- The most prevalent method used by underbanked households to receive income, by far, was direct deposit into a bank account (82.0 percent).
The survey results presented in this report show a 0.7 percentage point reduction in the unbanked rate between June 2013 and June 2015, with roughly half of the decline attributable to improvements in the economic circumstances of U.S. households. The unbanked rate fell for many groups that had high unbanked rates in 2013. However, unbanked rates for these groups remain substantially higher than the overall unbanked rate in 2015. Below, the report concludes with a discussion of opportunities to increase the use of mainstream banking services by unbanked and underbanked households.
Expand Households with volatile income have higher unbanked and underbanked rates. Bank products and services that enable households to better manage their account relationships and meet their financial needs when income is volatile may help these consumers open and sustain bank accounts and conduct a greater share of their financial transactions within the banking system.
More than one in five U.S. households have income that varies “somewhat” or “a lot” from month to month, and these households are more likely to be unbanked or underbanked. Income volatility has notable effects even among households with moderate levels of income.
For example, among households with annual income between $30,000 and $50,000, those with volatile income have an unbanked rate (7.4 percent) almost twice that of households with steady income (4.0 percent). This difference of 3.5 percentage points is similar in magnitude to the difference in unbanked rates between households with annual income of $30,000 to $50,000 and households with annual income of $50,000 to $75,000. Households with volatile income also use alternative financial services at higher rates, even among banked and moderate- and higher-income households.
Banks may have opportunities to build and strengthen relationships with unbanked and underbanked households that have volatile monthly income by offering products and services that enable them to better manage their account relationships and meet their financial needs within the banking system. Later in this section, we discuss implications related to savings and bank credit that may be helpful to these households. The following are three additional examples of opportunities for banks to serve these households:
- Consumers with volatile income might find it difficult to consistently meet minimum balance requirements even in cases where, over time, their balances and deposits are substantial. Accounts with low or no minimum balance requirements and low fees that are consistent with the FDIC Model Safe Accounts Template may help these households enter and stay in the banking system.1 In addition, in the 2013 survey, we found that households that recently became unbanked were more likely to have experienced either a significant income loss or job loss that they said contributed to the household becoming unbanked. Targeted solutions that assist customers who experience unexpected events such as job loss may also help these households retain their bank accounts during these periods of transition.
- Consumers with volatile income may have a need to monitor account balances closely. Almost all households with volatile income have access to a mobile phone, and more than eight in ten have access to a smartphone. Mobile banking technology may help these households manage their financial inflows and outflows. Encouraging the use of mobile banking, including features such as balance monitoring and timely alerts and notification, may help these households better cope with their fluctuating income streams.2
- In addition, during periods when income is low, households with volatile income may feel more pressed to use incoming funds as soon as they are received. Banking services that offer expedited access to funds for a reasonable fee, while following sound risk-management practices, may be particularly attractive to these households. Similarly, current efforts to offer quicker availability of funds through improvements in the payment system may also benefit households with volatile income.
1 See the FDIC Model Safe Accounts Template - PDF.
2 In focus groups conducted by the FDIC in 2015, some consumers who used mobile financial services reported that mobile alerts and monitoring tools helped them reduce fees, better track their finances, and improved on-the-spot decision making. See “Opportunities for Mobile Financial Services to Engage Underserved Consumers Qualitative Research Findings,” May 25, 2016, and “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016.
Expand Use of smartphones to engage in banking activities continues to grow at a rapid pace. Consistent with implications from the 2013 survey, this growth presents promising opportunities to use the mobile platform to increase economic inclusion. At the same time, physical access to branches remains important.
Access to, and use of, smartphones to engage in banking activities continues to grow at a rapid pace. Between 2013 and 2015, smartphone access increased by 30 percent for unbanked households and by 17 percent for underbanked households. As of 2015, roughly four in ten unbanked households and three in four underbanked households have access to a smartphone. From 2013 to 2015, overall use of mobile banking grew by 37 percent, and mobile banking as the primary method of account access grew by 66 percent. By 2015, slightly less than half (49.2 percent) of all banked households use a physical channel (bank branch or ATM/kiosk) as their primary method of account access. Underbanked households continue to be more likely than fully banked households to use the mobile channel as their primary means of account access (12.6 percent versus 8.7 percent). These findings suggest, consistent with other FDIC research, that banks could use the mobile banking platform to increase economic inclusion.3
At the same time, the results suggest that modification of branch services may have economic inclusion implications. Although the proportion of households that primarily use bank tellers to access their accounts has fallen, lower-income households, less-educated households, older households, and households located in rural areas continue to rely on bank tellers as their primary method for accessing their bank accounts. In addition, use of bank tellers remains prevalent, even among households that primarily use other methods for accessing their accounts. Finally, research from the Federal Reserve Board of Governors indicates that 44 percent of households responding to a 2013 survey chose their bank based on the location of its offices, by far the leading factor in their selection.4
3 See “Opportunities for Mobile Financial Services to Engage Underserved Consumers Qualitative Research Findings,” May 25, 2016.
4 Estimates are from the 2013 Survey of Consumer Finances.
Expand One in five unbanked households save for unexpected expenses, although for the most part not in insured depositories. Bringing these savings into the banking system could allow these households to build banking relationships that help them safeguard funds, enhance access to credit, and increase financial security.
While unbanked households are less likely than underbanked and fully banked households to set aside money for unexpected expenses or emergencies, one in five unbanked households save for this purpose. However, roughly two-thirds of these households keep the savings in the home, or with family or friends. When not kept in a bank account, these savings are not insured and could be lost or stolen. An additional one in eight of these households keep these savings on a prepaid card, most of which are not obtained from a bank.
Access to mainstream financial services at an insured depository institution provides consumers with a safe place to save, conduct basic financial transactions, and build a credit history and access credit on favorable terms. Banks that provide households with safe, affordable savings options can address a present need and create opportunities for these additional benefits. Low-cost savings accounts with low minimum balance requirements are one option that unbanked households could use as a gateway to enter the banking system and build relationships with banks.5 With an established banking relationship, these households could eventually access lower-cost bank credit and increase their financial security. For example, households with thin or no credit histories that save in banks may use those deposits as collateral to access credit or to obtain credit on more favorable terms.
5 In interviews conducted by the FDIC in 2015, some banks discussed using low-fee savings accounts as gateway products into the banking system for unbanked consumers. See “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016.
Expand Banks may have the opportunity to help meet the credit needs of some households that have an unmet demand for bank credit. The vast majority of these households are banked, yet few applied for bank credit in the past 12 months. Many are also young. Banks could help meet the credit needs of these households by promoting the importance of building a credit history, incorporating nontraditional data into underwriting, and increasing households’ awareness of personal credit products.
Almost 14 percent of households have unmet demand for bank credit, meaning that in the past 12 months they used a nonbank credit product or were denied or felt discouraged about applying for bank credit (specifically credit cards and personal loans or lines of credit).
The vast majority (88 percent) of these households are banked. They conduct their monthly financial transactions (i.e., paying bills and receiving income) using their bank account. Despite an active banking relationship, fewer than one in three banked households with unmet demand for bank credit applied for a credit card or personal loan or line of credit from a bank in the past 12 months.
Some of these households may present opportunities for banks to extend credit in the form of credit cards or small-dollar personal loans. For example, about one-half of households with unmet demand for bank credit indicate that they were current on their bills over the past 12 months. While keeping up with bills is an incomplete measure of creditworthiness, it nevertheless provides some insight into the financial situation of these households.6
Many households with unmet demand for bank credit are young, suggesting they may have little to no credit history. Efforts to promote credit building or to incorporate nontraditional credit data into bank underwriting could expand access to bank credit for such households, while also building or strengthening these consumers’ relationships with banks.
For banked households, banks could potentially use households’ account transaction and other banking relationship information to help underwrite and offer credit. In addition, banks could undertake communications strategies to increase households’ awareness of short-term personal credit products.7
6 In some cases, banks may not be able to meet the credit needs of households that did not fall behind on bills, because of credit risk associated with previous negative credit events or high debt-to-income ratios.
7 In interviews and focus groups conducted by the FDIC in 2015, many consumers said that they were unaware of bank products and services that provide alternatives to nonbank providers. Similarly, many banks said it was essential to have a marketing and communication strategy to make consumers aware of these offerings. See “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016.
Expand The great majority of underbanked households use banks to pay bills, although many also use cash and nonbank money orders. Efforts to encourage and make it easier for a range of payees to accept electronic payments, and outreach to raise awareness of bill pay and other electronic payments among lower-income households, may facilitate the movement of these transactions into the banking system.
Roughly 20 percent of households are classified as underbanked in this report, meaning that they have a bank account but used at least one alternative financial service in the past 12 months. However, substantial differences exist among underbanked households in the ways they conduct their financial transactions. Understanding these differences has implications for policymakers, financial institutions, and other stakeholders interested in strengthening these households’ engagement with the mainstream financial system.
The vast majority of underbanked households use banks to pay monthly bills. About one in six, however, use cash or nonbank money orders as their primary method for paying bills. Another roughly one in four use bank methods as their primary method for paying bills, including bank debit card, electronic payment from a bank account, and personal check drawn on a bank account, but they also use cash and nonbank money orders to pay some bills in a typical month.
For the one in four underbanked households that primarily use bank methods to pay bills but also use cash or nonbank money orders to pay some bills in a typical month, the use of cash or money orders may be the result of payee requirements. Efforts to encourage and make it easier for a range of payees (for example, landlords) to accept electronic payments may help these households reduce their use of cash and nonbank money orders.
Some of the underbanked households that use cash and nonbank money orders as their primary method of paying bills may not be aware of the range of bank products that they can use to pay bills. In focus groups conducted by the FDIC in 2015, some consumers and consumer counselors noted that low-income and underbanked consumers may be unfamiliar with the range of bank products and services that they can use to meet their financial transaction needs.8 Banks may have an opportunity to encourage consumers to conduct these transactions within the banking system, for example, by raising awareness of alternatives such as bank bill pay or person-to-person payments through bank accounts, including emerging options for faster payments.
8 See “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016.
Expand The majority of unbanked households think that banks have no interest in serving households like theirs, and a significant share of unbanked households do not trust banks. These findings suggest that understanding and addressing the sources of these attitudes and building trust and familiarity are important to attract and develop relationships with unbanked consumers.
More than half (55.8 percent) of unbanked households think that banks are “not at all interested” in serving households like theirs. This is more than three times higher than the roughly 17 percent of underbanked households, and more than four times higher than the 12 percent of fully banked households, that hold the same view. Even among unbanked households with income of at least $50,000, 47 percent perceive that banks are not at all interested in serving households like theirs. Similar shares of previously banked households and households that have never had a bank account also have this perception.
Unbanked households that hold this view are significantly less likely to be interested in opening an account in the future compared with unbanked households that perceive banks to be “very interested” or “somewhat interested” in serving households like theirs. Only a small proportion (17 percent) of unbanked households that perceive banks to be not at all interested in serving households like their own is “very” or “somewhat” likely to open an account in the next 12 months, compared with 50 percent of unbanked households that perceive banks to be very or somewhat interested.
Among unbanked households that think banks are not at all interested in serving households like theirs, only a minority are unbanked because banks do not offer needed products or services. Less than one in five (18 percent) of these households cited this as one reason they are unbanked, and only 1 percent cited this as the main reason.
In addition, more than one in four unbanked households say they are unbanked because they do not trust banks, and roughly one in ten unbanked households are unbanked mainly because they do not trust banks. Lack of trust in banks was the second most frequently cited main reason for being unbanked.
These statistics are consistent with key findings from qualitative research that the FDIC conducted with unbanked, underbanked, and low-and-moderate income consumers, in which trust and familiarity emerged as important themes.9 Taken together, the survey and qualitative research findings suggest that attracting and developing longer-term sustainable relationships with unbanked consumers requires going beyond developing new products and services to establish trust and familiarity with unbanked consumers.10
10 In interviews conducted by the FDIC in 2015, some banks discussed working with established, trusted partners in their local communities to build trust and educate unbanked and low-and-moderate income consumers about banking services. For examples of this and other strategies, see “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016.