Bank Efforts to Serve Unbanked and Underbanked Consumers

Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research

Kristopher M. Rengert Sherrie L. W. Rhine

FEDERAL DEPOSIT INSURANCE CORPORATION Division of Depositor and Consumer Protection May 25, 2016

Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research

TABLE OF CONTENTS

EXECUTIVE SUMMARY........................................................1

I. Introduction......................................................................... 3 A. Background and Methodology B. Potential Limitations C. Report Structure

II. Earning Trust and Achieving Familiarity Are Crucial Challenges ...................................................... 6 A. Bank Executive Perspectives on Trust and Familiarity B. Consumer and Counselor Perspectives on Trust in and Familiarity with Banks C. Some Consumers Feel that "They Don't Belong" in Banks 1. They believe that banks are only interested in serving wealthy customers. 2. The environment inside banks feels foreign or intimidating to them. 3. Many consumers feel more comfortable at alternative financial service providers than at banks. 4. Some consumers are concerned that they are likely to be rejected by banks. D. Consumers' Lack of Familiarity with Banks Impedes Access

III. Bank Strategies to Build Trust and Familiarity............. 10 A. Creating Local Partnerships B. Establishing a Welcoming Local Presence in the Community C. Reaching Local Consumers with Appropriate Language and Communications D. Offering Branch Products and Services in Convenient Locations and During Convenient Hours

IV. Bank Strategies to Offer a Range of Products and Services.................................................... 13 A. Bank Products and Services 1. Gateway products and services 2. Low- or no-fee transaction accounts 3. Second-chance checking accounts 4. General purpose reloadable (GPR) prepaid cards 5. Small-dollar loan products B. Communicating Relevance of Bank Products and Services in Consumers' Financial Lives C. Consumer and Consumer Counselor Perspectives on Marketing Efforts

V. Bank Strategies to Help Sustain Banking Relationships with Consumers ....................................... 25 A. Enhancing Staff Training, Development, and Retention B. Developing Internet and Mobile Tools to Streamline Opening and Managing Accounts

VI. Bank Strategies to Ensure Business Objectives Are Met ........................................................ 27 A. Internally Communicating the Institution's Commitment to Serving the Unbanked and Underbanked B. Assessing and Resolving Implementation Challenges C. Investing in Technology, Staffing, and Training

VII. Major Implications of the Study.................................... 32

APPENDIX. RESEARCH METHODOLOGY........................... 35

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