The paper identifies the chief reasons for individuals being unbanked/underbanked and highlights existing actions from banks, credit unions, non-profits, and policymakers that have shown promise in addressing the challenge of bringing individuals more fully into the banking system. The paper also makes recommendations that policy makers should consider moving forward. The paper is authored by The Clearing House, the American Bankers Association, the Consumer Bankers Association, the Credit Union National Association, the Mid-Sized Bank Coalition of America, and the National Bankers Association.

"Financial inclusion and access to bank accounts and services is a key priority of banks and credit unions and an important shared goal of the private, nonprofit, and government sectors," said Rob Hunter, Deputy General Counsel of The Clearing House. "While there is much more work to be done, we are pleased that the percentage of unbanked U.S. households has steadily declined over the past decade. The recommendations set forth in the paper are aimed at expanding that progress."

The report concludes that instead of establishing a large, duplicative and potentially expensive banking infrastructure to create bank accounts through the Federal Reserve or the U.S. Postal Service (postal banking), there are more effective and less costly ways to address the unbanked/underbanked challenge, including:

Verifiable Identification: Verifiable identification is unavailable to many unbanked/underbanked individuals. Public policy makers should focus on this obstacle, as well as other factors that the private sector cannot address that contribute to the unbanked and underbanked challenge.
Encourage New Bank Accounts: When enrolling recipients in direct payment government benefit programs, individuals should be encouraged to open basic, low-cost bank accounts.
Public/Private Partnerships: Public policy should encourage public/private partnerships to continue to innovate and meet the changing needs of households and individuals, including continuing to advance targeted financial education and messaging on ways in which a bank account can meet an individual's current needs.
Continue Successful Programs: The banking industry should continue its efforts to reduce the percentage of unbanked households by embracing approaches with a proven track record of success, such as the Bank On initiative which promotes basic low-cost accounts.
Expand Broadband Access: Expanding broadband internet access to underserved areas allows individuals to better leverage digital banking services, which are the most convenient way to engage with unbanked/underbanked households.
Continued Examination of Unbanked Trends: Public policy makers should examine the factors that contributed to the sharp decline in the unbanked rate for Black and Hispanic households from 2015 to 2019 and the underlying reasons for continued observed racial disparity and the successful practices of Minority Depository Institutions and Community Development Financial Institutions for reaching financially underserved communities.

"This report details not just how many households are unbanked, but why," said Naomi Camper, ABA Chief Policy Officer. "It underscores why ABA continues to urge every bank in the country to offer Bank On-certified accounts, which are helping to bring more people into the banking system. With a Bank On-certified account, consumers can feel confident that banks want their business and can provide them with a low-cost, insured account that offers all the economic opportunities that come with being banked."

"This research underscores how important it is to remove barriers to financial access for the unbanked and underserved," said Ryan Donovan, Chief Advocacy Officer for the Credit Union National Association. "For over 100 years, America's credit unions have promoted thrift and provided access to credit for provident purposes. We look forward to working with policymakers to apply these findings and explore meaningful solutions that improve financial well-being for everyone."

"The nation's leading banks are uniquely positioned and committed to help ensure all Americans have access to safe and sound financial products," Richard Hunt, Consumer Bankers Association President and CEO. "This report outlines important policies and products that have successfully banked the unbanked and reaffirms the important role financial institutions can play to achieve this goal. CBA and our member banks will continue to advocate for equitable services and solutions that provide more communities the financial tools they need to prosper."