New white paper examines un- and under-banked

May 18, 2021

A new report from CUNA, The Clearing House, and other financial trade organizations outlines obstacles and viable solutions for improving financial inclusion. The report identifies the chief reasons for individuals being unbanked/underbanked and highlights existing actions from credit unions and other financial institutions that have shown promise in bringing individuals more fully into the financial system.

“This research underscores how important it is to remove barriers to financial access for the unbanked and underserved,” said Ryan Donovan, CUNA chief advocacy officer. “For over 100 years, America’s credit unions have promoted thrift and provided access to credit for provident purposes. We look forward to working with policymakers to apply these findings and explore meaningful solutions that improve financial well-being for everyone.”

The paper also makes recommendations that policy makers should consider moving forward.

“Financial inclusion and access to bank accounts and services is a key priority of banks and credit unions and an important shared goal of the private, nonprofit, and government sectors,” said Rob Hunter, Deputy General Counsel of The Clearing House. “While there is much more work to be done, we are pleased that the percentage of unbanked U.S. households has steadily declined over the past decade. The recommendations set forth in the paper are aimed at expanding that progress.”

The report concludes that rather than establishing a large, duplicative, and potentially expensive banking infrastructure to create bank accounts through the Federal Reserve or the U.S. Postal Service, there are other less costly ways to address the challenge.

These include:

  • Ensuring access to verifiable identification
  • Encourage recipients in direct payment government benefit programs, to open basic, low-cost accounts;
  • Public policy should encourage public/private partnerships to continue to innovate and meet the changing needs of households and individuals;
  • The financial services industry should continue to embrace approaches with a proven track record of success
  • Expand broadband internet access to underserved areas; and
  • Continued examination of the factors that contributed to the sharp decline in the unbanked rate for Black and Hispanic households from 2015 to 2019.

For credit unions, promoting financial well-being and advancing communities is an extension of their congressional mandate.

In addition to CUNA and The Clearing House, the paper is authored by the American Bankers Association, the Consumer Bankers Association, the Mid-Sized Bank Coalition of America, and the National Bankers Association.