Unbanked & Underbanked

Carol Highsmith, photographer. *Open bank vault*, at the Mechanics and Farmers Savings Bank. Between 1980 and 2006. Library of Congress Prints and Photographs Division.

During the June 8, 2017, congressional subcommittee hearing on digital commerce and consumer protection, among the topics discussed were the unbanked, underbanked, and their use of alternative financial services. The subcommittee concluded that as new technology disrupted established financial services institutions it would provide the unbanked and underbanked greater access to relevant financial services.

The Unbanked and Underbanked

According to a 2023 Federal Deposit Insurance Corporation (FDIC) survey, 96% U.S. households were “fully banked." This is a significant increase from previous years, and the lowest since the survey began in 2009. The survey found that 4.2 percent of U.S. households (representing 5.6 million households) lacked a bank or credit union account. In addition, 14.2 percent of U.S. households (representing 19.0 million households) were underbanked in 2023, meaning these households had a bank or credit union account yet primarily used nonbank products and services to meet their financial needs.

The FDIC's survey found that nearly half of banked households (48.3 percent) used mobile banking as their primary method to access their accounts.

Mobile Banking

The 2023 FDIC National Survey on Unbanked and Underbanked Households found that mobile banking is changing how consumers interact with financial institutions and is reshaping the industry by increasing options for using this technology to conduct financial transactions and develop relationships. Smartphones are ubiquitous among banked consumers, but many are not using them to improve their banking experience. According to the study, "Untapped potential exists for banks to engage these consumers and help them use technology to sustain and grow banking relationships. Late adopters might be ready to use more technology for banking, but they are at risk of being left behind if they are not considered part of banks’ technology strategies."

Additional Reading

The following sources from the Internet and from the print collections at the Library of Congress are useful in learning more about FinTech and the issue of access to banking services.

External Websites

2023 FDIC National Survey of Unbanked and Underbanked Households (FDIC, 2023)
This is a link to the FDIC's website page that lists all of the surveys the FDIC has conducted on the Unbanked and Underbanked. This is based on The Household Survey which collects information on bank account ownership and other financial products and services that households may use to meet their transaction and credit needs.
A Closer Look at Mobile Banking: More Uses, More Users (FDIC, 2018)
This survey examines the use of mobile phone banking including for transactions such as payments. While usage is increasing, privacy concerns still prevent adaptation for some potential users.
A Closer Look at the Unbanked: Cash-Only Households Versus Those That Use Prepaid Cards or Nonbank Payment Apps (FDIC, 2024)
Most unbanked households in the United States are “cash only,” meaning they use neither prepaid cards nor nonbank payment apps. These households must rely primarily on in-person cash transactions and thus are at risk of theft or loss when handling their day-to-day finances. Going forward, the cash-only unbanked may find it increasingly difficult to participate in the formal economy as the U.S. financial system evolves toward a more digital infrastructure. Economic inclusion strategies targeted toward the cash-only unbanked should focus on building trust in banks and demonstrating the value of a bank account, as this population appears to be especially disconnected from the mainstream banking system.
Consumer-Lending Discrimination in the FinTech Era, 2019 [PDF, 1,476 KB] External
Published in February 2019, written as a joint effort between UC Berkeley-Haas Business School, UC Berkeley-Law School and National Business Economics Research (NBER). The document is titled: Consumer-Lending Discrimination in the FinTech Era.
The Decline of Big-Bank Lending to Small Business: Dynamic impacts on local credit and labor markets, 2017. External
Published March 2017, and written by Brian S. Chen, Samuel G. Hanson and Jeremy C. Stein. This National Business and Economic Research (NBER) working paper, Number 23843, is titled: The Decline of Big-Bank Lending to Small Business: Dynamic impacts on local credit and labor markets. Click on this link to access this document.
Economic Well-Being of U.S. Households (Federal Reserve)
This study includes information about the "unbanked" and the types and numbers of accounts and investments held by households.
FDIC: Banks Efforts to Serve Unbanked and Underbanked (FDIC, 2016)
This publication from May 25, 2016 covers what banks are doing to earn the consumer's trust, strategies for offering a range of products, for sustaining customer relationships, and ensuring business objectives are met.
Financial Inclusion: Access to Bank Accounts (Congressional Research Report, Updated August 2, 2024)
Access to bank accounts continues to be a subject of congressional interest and legislative proposals. In the 118th Congress, H.R. 758 would incentivize new bank formation by reducing barriers to entry, which could improve access to banking for underbanked communities. H.R. 8740, would direct the Consumer Financial Protection Bureau to report every two years to Congress to recommend policy changes to increase financial access for unbanked, underbanked, and underserved consumers and coordinate with regulators and industry to assess those findings.
A Financial System That Creates Economic Opportunities Nonbank Financials, FinTech, and Innovation (Treasury Department, July 31, 2018)
This is report from the Treasury Department is the fourth and final report in a series of reports released under E.O. 13772. Previous reports included Banks and Credit Unions, Capital Markets, Asset Management and Insurance. This particular report looks at the landscape that will better support nonbank financial institutions, embrace financial technology.
Financing through FinTech : online lending's role in improving small business, 2017 [PDF, 6.2 MB]
This is a hearing before the Subcommittee on Economic Growth, Tax, and Capital Access of the Committee on Small Business, United States House of Representatives, One Hundred Fifteenth Congress, first session, hearing held October 26, 2017 (115-044). Incudes testimony submitted by PayNet.
Marketplace Lending: FinTech in Consumer and Small-Business Lending, September 4, 2018 (Congressional Research Service)
This CRS report (R44614) was updated and republished September 2018. It begins with an overview of marketplace lending, then discusses its potential opportunities and risks, regulations, potential future developments and a conclusion. The report includes a Figure that illustrates marketplace lender business models, a Table illustrating examples of federal regulation potentially applicable to marketplace lending and an Appendix illustrating potential federal regulation applicable to marketplace lending and the author gives his contact information. All pages contain footnotes.
The Ultimate List of Mobile Banking Trends and Statistics (2024) (MX Technologies) External
This detailed blog researches statistics from a variety of sources on mobile banking to look at its overall acceptance rate, differing generational attitudes, most common functions used, and its affect on customer retention.

Print Resources

This is just a selection of books on this topic. The books listed below link to fuller bibliographic information for each item in the the Library of Congress Online Catalog. Links are provided for additional online content when available.

Consumer Finance by Adam Jeremiah Levitin
Call Number: KF1040 .L48 2018
Published/Created: 2018-09-14
This text focuses on consumer financial services markets and their regulation for law students. The book provides comprehensive coverage of the regulation of consumer credit, payments, and financial data markets by federal, state, and private law, including detailed coverage of the authority of the Consumer Financial Protection Bureau (CFPB), a powerful federal regulatory agency. The book acquaints students with the full range of consumer financial products, how they operate, the risks and policy issues they raise, and their regulation. The book provides a look at how regulatory agencies work, offering a practical look at how statutes and regulations interact and how regulatory agencies enforce them. Includes detailed coverage of the CFPB, a federal regulatory agency with broad authority over consumer credit, payment, deposit, and financial data markets Comprehensive treatment of consumer credit regulation, including mortgages, credit cards, auto loans, student loans, and small dollar loans, as well as credit disclosures, usury, and fair lending regulation State-of-the-art coverage of consumer payment systems, with detailed coverage of electronic payment systems (credit cards, debit cards, ACH) and mobile wallets Coverage of topics including anti-money laundering regulations, behavioral economics, fair lending laws, and consumer financial data privacy and data security.
Global Findex Database 2017 by Asli Demirgèð-Kunt; Leora Klapper; Dorothe Singer; Saniya Ansar; Jake Hess; World Bank Staff
Call Number: HG173 .D425 2018
Published/Created: 2018-04-19
In 2011 the World Bank--with funding from the Bill and Melinda Gates Foundation--launched the Global Findex database, the world's most comprehensive data set on how adults save, borrow, make payments, and manage risk. Drawing on survey data collected in collaboration with Gallup, Inc., the Global Findex database covers more than 140 economies around the world. The initial survey round was followed by a second one in 2014 and by a third in 2017. Compiled using nationally representative surveys of more than 150,000 adults age 15 and above in over 140 economies, The Global Findex Database 2017: Measuring Financial Inclusion and the FinTech Revolution includes updated indicators on access to and use of formal and informal financial services. It has additional data on the use of financial technology (or FinTech), including the use of mobile phones and the Internet to conduct financial transactions. The data reveal opportunities to expand access to financial services among people who do not have an account--the unbanked--as well as to promote greater use of digital financial services among those who do have an account. The Global Findex database has become a mainstay of global efforts to promote financial inclusion. In addition to being widely cited by scholars and development practitioners, Global Findex data are used to track progress toward the World Bank goal of Universal Financial Access by 2020 and the United Nations Sustainable Development Goals.The database, the full text of the report, and the underlying country-level data for all figures--along with the questionnaire, the survey methodology, and other relevant materials--are available at www.worldbank.org/globalfindex.
The Unbanking of America by Lisa Servon
Call Number: HG2491 .S47 2017
Published/Created: 2017-01-10
Why Americans are fleeing our broken banking system in growing numbers, and how alternatives are rushing in to do what banks once did Today nearly half of all Americans live from paycheck to paycheck, and income volatility has doubled over the past thirty years. Banks, with their high monthly fees and overdraft charges, are gouging their low- and middle-income customers, while serving only the wealthiest Americans. The author delivers a stunning indictment of America's banks, together with eye-opening dispatches from inside a range of banking alternatives that have sprung up to fill the void. She works as a teller at RiteCheck, a check-cashing business in the South Bronx, and as a payday lender in Oakland; She looks closely at the workings of an informal lending club; and she delivers fascinating, hopeful portraits of the entrepreneurs reacting to the unbanking of America by designing systems to creatively serve many of us.

Fintech: Financial Technology Research Guide