Last Wednesday, the FDIC released the results of the National Survey of Unbanked and Underbanked Households. The survey found that over 1 in 4 US households are unbanked or underbanked with “unbanked” defined as no one in the household having a checking or savings account while “underbanked” was defined as those households that have an account but rely on non-bank financial services such as those provided by check cashing services and payday lenders. In today’s post, I’m going to focus on the unbanked with underbanked information to come next.

There have always been outreach efforts by some banks to bring the unbanked into the fold. These efforts have included “Banking 101” courses, microfinancing offers, and multilingual representatives. But as I’ve included unbanked information in my presentations on self-service, I’ve had some comments that these groups are not “good” bank clients so banks don’t see any need to reach out.

I know we have the saying that stereotypes arise for a reason but I think there are considerable misconceptions about the unbanked. Some think that anyone who doesn’t have a bank account can’t get one, due to lack of documentation. In reality, lack of documentation was 9th on the list behind such things as “Do not have enough money to need account” and “Do not write enough checks”.

These reasons may seem strange in an era of free checking and debit cards. However, someone recently explained to me that in many countries you really do have to have a minimum amount of money to open an account – therefore, those unbanked who have moved here may not realize that they can open an account with no minimum balance.

Another surprising result (to me, at least) was that over 53% of the unbanked households had previously held a bank account, so these households actually had been bank customers at one point in time and we lost them somewhere along the way. If the first reason why someone no longer has a bank account that pops into your head is that they must have bounced too many checks, you would be naming the #6 reason for closing an account (households who had their accounts closed on them were not included in the survey results). The #1 reason again was “Do not have enough money to need account” and #2 was “Did not need or want account/did not see value of account”.

I’m just scratching the surface of these results and I would encourage you to take a look at the report to get a full picture. My big takeaway on the unbanked is twofold – 1) let the education continue and 2) we have a lot of work to do if we have to explain the value of a checking or savings account.