The FDIC Get Banked campaign sought to address a persistent challenge in the U.S. financial system: providing unbanked households with greater access to mainstream banking services. The issue gained additional urgency during the pandemic, when consumers without bank accounts could face delays or additional hurdles in receiving stimulus payments and other government benefits.
By using its research on unbanked households and partnering with participating financial institutions, the FDIC aimed to demonstrate the practical benefits of account ownership, including faster access to government payments. However, increasing financial inclusion involves more than simply making accounts available. The campaign would also need to address the reasons many unbanked consumers choose not to maintain traditional banking relationships.
Much has been written in the popular media about how difficult it has been to distribute stimulus funds to all eligible recipients quickly. There are two central reasons for this: a) individuals do not trust the federal government with their checking account credentials that could facilitate a fast and safe direct deposit of funds and b) they don’t have an account.
The FDIC is trying to do something about the latter. The Washington Post writes that FDIC will launch a campaign to encourage account ownership through a partnership with participating financial institutions:
To make it easier for these households to get their stimulus funds, the FDIC has launched a public awareness campaign — #GetBanked — to persuade unbanked individuals of the benefits of having a bank account.
The campaign will run in Atlanta and Houston, where the FDIC says its research finds a disproportionately higher percentage of unbanked Black and Hispanic households.
This summer, more stimulus money is slated to be distributed by the IRS in the form of advance child tax credit payments. Having a bank account will speed up the payments.
President Biden’s $1.9 trillion covid-related aid includes a substantial increase to the Child Tax Credit, which for the 2021 tax year expands to a fully refundable $3,600 for children 5 and younger and $3,000 for those ages 6 to 17.
The payments are slated to begin in July. The money is an advance, amounting to roughly half of the tax credit parents can claim when they file their federal returns next year. Having a bank account could mean fewer fees for people who need every dollar delivered to them by the IRS.
This is going to be very interesting to watch. The FDIC, which conducts a biennial report on the unbanked, is using its own data and knowledge of the unbanked population to try and solve the issues that they have uncovered. I am hopeful that this initiative will prove to overcome another issue found in their study; the majority of the unbanked do not want an account.
The FDIC Get Banked campaign represented an opportunity to turn years of research on unbanked households into a targeted effort to increase account ownership. Stimulus payments and advance Child Tax Credit payments provided an immediate example of how having a bank account could help consumers receive funds more quickly and potentially avoid additional fees.
The larger challenge would be convincing consumers who did not want bank accounts that mainstream financial services could provide meaningful value. Addressing concerns about trust, costs, and the perceived benefits of banking would therefore be critical to determining whether the initiative could produce lasting improvements in financial inclusion.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
