Banks participating in the FDIC’s youth savings pilot program are seeing strong results, agency chairman Martin Gruenberg said today, adding that the FDIC will by year’s end provide a “roadmap” for other banks wishing to offer similar programs in schools.
Twenty-one banks participated in the pilot over the past two years, offering savings accounts to in most cases low- and moderate-income youth through schools or nonprofit partners. In the 2015-16 school year, nearly 4,700 accounts were opened. Bank approaches varied, with some opening in-school branches, some offering visits to nearby branches and others experimenting with mobile banking for youth.
“Throughout the pilot, we heard a number of stories that demonstrate the significant role that bank programs can play in the lives of the largely low- and moderate-income youth participating in their programs,” said Gruenberg, citing a case where a bank provided a non-custodial youth account for a teen father whose relatives were draining savings meant for child support, and another case where students hired as branch staff at their school became a peer financial counselors. “Offering financial education to school-age children opens the door to many opportunities and establishes the groundwork for a lifelong banking relationship,” he added. Read the speech.