Banking services: Regulators have taken steps to increase access, but measuring the effectiveness of the measures could be improved

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What the GAO found

According to GAO analysis, low-income, less-educated, and minority households are more likely to be unbanked (not having a checking or savings account) or underbanked (having a checking account but use alternative financial services, which can be expensive). Federal Deposit Insurance Corporation (FDIC) survey data (see table). According to the FDIC survey and market participants and observers, consumers might not use banks for reasons such as lack of money, unexpected or high bank fees, lack of trust, and privacy concerns. .

Banking status by household income, education and race, 2015-2019 (percentage)

Unbanked

Underbanked

Fully Banked

Revenue

Less than $15,000

25

22

53

$15,000 to $29,999

12

23

66

$30,000 or more

2

18

81

Education

No high school diploma

22

26

51

High school diploma or higher

5

18

77

Race and ethnicity

Black

16

31

53

Hispanic

14

30

56

White

3

14

83

Total

6

19

75

Source: GAO analysis of Federal Deposit Insurance Corporation (FDIC) data. | GAO-22-104468

Note: For details, see Table 2 in GAO-22-104468. Totals do not always add up to 100% due to rounding.

Several laws and regulatory factors can intentionally or unintentionally affect the cost and availability of basic banking services. For example, two studies found that large banks may have raised checking account fees to offset regulatory limits on their debit card transaction processing fees. By contrast, regulations requiring consumers to opt-in to overdraft protection may have reduced overdraft fees paid by consumers who did not opt-in, according to market watchers and three Consumer Financial Protection Bureau studies. .

The actions of selected regulators reviewed by GAO regarding unbanked and underbanked households have generally focused on research, education, and monitoring. But some regulators either lack results-oriented measures of their efforts to increase access to banking services or their measures do not cover all of their key initiatives. For example, the FDIC piloted a public awareness campaign on the benefits of bank accounts. Yet its measures only indicate whether a task has been completed and do not incorporate outcome information (which could be used to evaluate activities). The National Credit Union Administration (NCUA) measures the time it takes to process credit union charters, which helps gauge timeliness but does not provide information to gauge agency performance in facilitating access to credit union services. The Office of the Comptroller of the Currency (OCC) has launched an initiative to increase access to credit, including small dollar loans. But the OCC did not incorporate performance measures for a key initiative to improve access to banking services. By using outcome-based performance measures for their efforts to increase access to banking services, the FDIC, NCUA, and OCC could better identify opportunities for improvement in all key initiatives and set priorities accordingly. result.

Why GAO Did This Study

Access to reliable and affordable banking services is essential for the financial well-being of households. In 2019, the FDIC estimated that 5.4% of US households surveyed were unbanked. The GAO used survey data to estimate that an additional 17.9% had a bank account but used alternative financial services, such as check cashing or payday loans that may have fees or lower interest rates. high interest.

GAO was asked to examine the factors affecting household access to basic banking services. Among other objectives, this report examines factors associated with the use of basic banking services by households, statutory and regulatory factors affecting the availability and cost of services, and the efforts of some federal financial regulators to address these issues. GAO analyzed FDIC survey data on unbanked and underbanked households, reviewed studies of laws and regulatory factors, reviewed agency literature, and interviewed market participants, observers, and market participants. agency managers.

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