Banking Status and Alternative Financial Services Steven Shepelwich - - PowerPoint PPT Presentation

Banking Status and Alternative Financial Services

Steven Shepelwich

Senior Community Development Advisor steven.shepelwich@kc.frb.org / 800-333-1020 November 7, 2012

Overview

• Provide background information on use of alternative financial services

for discussion

• Primary reference: 2011 FDIC National Survey of Unbanked and

Underbanked Households

• 2nd biennial survey
• Partnered with US Census collecting responses from 45,000 households
• Definitions:
• Unbanked: No one in household has checking or savings account
• Underbanked: Household has a checking and/or savings account and has

used an alternative financial service in last 12 months

Banking Status Nationally

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

National: Unbanked 8.2%, Underbanked 21.1%

Banking Status in Oklahoma

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

69% 20% 8% 3% 62% 23% 11% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% Banked Underbanked Unbanked Underbanked Status Unknown US Oklahoma

Unbanked Status by Year

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

7.6% 8.2% 10.0% 10.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2009 2011 US Oklahoma

Banked Status by Ethnicity

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

Unbanked Underbanked 21% 20% 15% 4% 33% 38% 6% 0% 20% 40% 60% Black Hispanic non- Black American Indian/Alaskan White non-Black non-Hispanic Unbanked Oklahoma Unbanked US 34% 29% 27% 16% 29% 33% 22% 0% 10% 20% 30% 40% Black Hispanic non-Black American Indian/Alaskan White non-Black non-Hispanic Underbanked Oklahoma Underbanked US

Reasons for Being Unbanked

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

7% 8% 6% 16% 33% 4% 7% 8% 26% 33% 0% 5% 10% 15% 20% 25% 30% 35% Fees or minimums too high Don't like/trust banks Can't open due to ID, credit, etc. Do not need or want acount Do not have enough money Never-Banked Previously Banked

AFS Considered in the Survey

– Transaction AFS:

• Non-bank money orders
• Non-bank check-cashing services
• Non-bank remittances

– Credit AFS:

• Payday lending
• Pawn shops
• Refund anticipation loans (RALs)
• Rent-to-own agreements

Use of Alternative Financial Services

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

74% 71% 32% 100% 94% 37% 43% 39% 14%

0% 20% 40% 60% 80% 100% 120%

Used Any AFS Used Transaction AFS Used Credit AFS All HH Underbanked Unbanked

Timing of AFS Use

Unknown, 2.9 Used in the Last Year, 25.4 Never Used, 54.3 Used Over a Year Ago, 17.4 Last 2-12 months, 13.4 Last 30 days, 12.0

Notes: Percentages are based on 120.4 million U.S. households. Percentages may not sum to 100 because of rounding. *The AFS included in this measure are non-bank money orders, non-bank check cashing, non-bank remittances, payday loans, and pawn shops. Households were not asked whether they used rent-to-own agreements or RALs in the last 30 days.

Use of Specific AFS

3.7 4.5 5.5 93.5 92.6 92.8 89.9 91.7 84.6 64.6 18.3 7.7 2.9 1.7 1.2 1.5 14.5 2.9 2.2 3.2 2.5 2.8 2.7 2.5 2.6 2.4 2.1 2.6

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Refund Anticipation Loan Rent-to-Own Payday Loan Pawn Shop Non-Bank Remittance Non-Bank Check Cashing Non-Bank Money Order

Percentage of All Households Used in last 12 months Used, but not in last 12 months Never Used Unknown

Notes: Percentages may not sum to 100 because of rounding. "Unknown" includes households whose specific AFS use is unknown and those who used one or more specific AFS with timing unknown.

Use of Specific AFS in Last 30 Days

32.1 25.0 3.9 0.5 2.7 28.0 8.9 5.7 3.2 2.7 5 10 15 20 25 30 35 Non-Bank Money Order Non-Bank Check Cashing Non-Bank Remittance Payday Loan Pawn Shop Percentage of Households Unbanked Underbanked

Note: Percentages are based on 9.9 million unbanked households and 24.2 million underbanked hosueholds.

Characteristics of Heavy AFS Users

• Among households that have used AFS in the last 30 day

– 25.2 percent are unmarried female families – 29.1 percent are black and 23.5 percent are Hispanic – 44.4 percent live in the South

• Among households that have used multiple AFS in the last

year – 38.0 percent are younger than 35 – 29.7 percent are black and 24.3 percent are Hispanic – 26.8 percent are unmarried female families

Prepaid Card Use

From the 2011 FDIC National Survey of Unbanked and Underbanked Households available at www.economicinclusion.gov

10% 18% 27% 11% 10% 12% 19% 6% 0% 5% 10% 15% 20% 25% 30% All Households Unbanked Previously Banked Never Banked 2009 2011

Additional Resources

• FDIC National Survey of Unbanked and Underbanked Households:

www.economicinclusion.gov

• FDIC National Survey of Banks' Efforts to Serve the Unbanked and

Underbanked: www.fdic.gov/unbankedsurveys/

• A Study of the Unbanked and Underbanked Consumer in the 10th Federal

Reserve District: http://unbanked.kcfed.org

• Changes in U.S. Family Finances from 2007 to 2010: Evidence from the

Survey of Consumer Finances: http://www.federalreserve.gov/econresdata/scf/scf_2010.htm