FDIC: Share of Unbanked Americans Reaches Record Low in 2019

The share of U.S. households that are unbanked continued falling in 2019, reaching 5.4%, the lowest rate yet recorded in the FDIC’s biennial How America Banks report released today. The figure fell from a high of 8.2% in 2011, but the report cautioned that the coronavirus pandemic—which took place after the survey was fielded—“is likely to contribute to a rise in the rate of unbanked households.”

The unbanked rate saw greater percentage point drops for Black, Hispanic and multiracial households. Black households’ unbanked rate dropped from 16.8% to 13.8%, while the rate for Hispanics fell from 14.4% to 12.2%. The share of unbanked households with two or more races fell from 8.5% to 4.9%. The rate for Asian-American households fell from 2.6% to 1.7%. White households saw their unbanked rate drop from 3% to 2.5%.

Among the unbanked, 29% said that not having enough money for a minimum balance requirement was the main reason. Three quarters of unbanked Americans said they were not at all or not very interested in having a bank account. Today, as part of its efforts to reduce the ranks of the unbanked, Earlier today, the American Bankers Association urged all banks to offer low-cost accounts with predictable costs and safe features that meet the Bank On standards.

The survey no longer tracks a separate category for “underbanked” Americans but reported on consumers’ use of nonbank financial services and credit. The survey showed that 72.5% of households accessed bank credit in 2019, up from 69.5% in 2017, while just 4.8% accessed nonbank credit—such as payday loans and pawn shops—down from 7.5% in 2017.

Mobile banking top channel for account access in 2019

Even before the pandemic—which accelerated digital banking use—34% of American households used mobile banking as the primary method of accessing their bank account in 2019, the survey showed. The share is more than double the figure from 2017, when 15.6% said mobile banking was their primary method. Most of the growth in mobile banking appeared to come from online banking, which fell from 36% in 2017 to 22.8% in 2019.

Meanwhile, 21% of respondents said they used a bank teller, down from 24.3% in 2017, while 19.5% said they primarily used an ATM, slightly less than in 2017. Less than 3% used telephone banking and other methods. The share of banked Americans who never visited a bank branch in 2019 rose from 14% to 17%, while the share visiting a branch 10 or more times fell from 35.4% to 28.4%.

Both unbanked and banked Americans reduced their use of prepaid accounts from 2017 to 2019, with the overall use of prepaid dropping from 9.7% to 1.2%. The survey also showed that 32.3% of banked Americans used a nonbank person-to-person payment service such as Venmo or Cash App.