Despite risingdissatisfaction with banks in recent years, fewer consumers are going withoutbanking services these days.
The Federal Deposit Insurance Corporation (FDIC), which surveysunbanked and underbanked households every 2 years, has found the percentage ofhouseholds with no bank accounts fell from 8.2% in 2011 to 7.7% in 2013.
The share of underbanked households remained essentiallyunchanged at 20%.
What’s responsible formore consumers returning to the bank? The FDIC speculates that an improvingeconomy has something to do with it, along with changing demographics.
Millions of consumersdropped out of banking when banks began to rely more heavily of fee income.Consumers living on the margin decided banks were unaffordable when they had topay a monthly service charge on their checking account and overdraft fees whenthey overdrew their accounts.
Three years ago a grassroots effort urged fed-up customers tomove their accounts from large mega-banks to credit unions and small communitybanks that charge fewer fees, an event that was declared “bank transfer day.”
However, the bankingclimate appears to have improved a bit since then. Recent changes in thebanking rules have allowed consumers to opt out of automatic overdraft fees andbanks face stricter requirements in the way they debit charges, meaning thereare fewer cases in which an account is overdrawn.
Even though today’sbanking customers, particularly those that are younger and/or tech-savvy, arelooking at Internet/direct and branchless banking, some realize that a livepresence is still desired. This can beparticularly so when investigating or discussing higher-level services such assavings, loans, and investment choices. And with an improving economy, many banking customers are reviewingtheir options, including choosing or retaining traditional financialinstitutions that can best accommodate their growing needs.
Overview by Ed O’brien, Director, Banking Channels Advisory Service for Mercator Advisory Group
