What is Economic Inclusion?
Defining the Issue
Economic inclusion is a term used to describe a variety of public and private efforts aimed at bringing underserved consumers into the financial mainstream. In the US, there are a number of partnerships and initiatives focused not only on expanding the availability of safe, affordable financial products and services, but also on educating consumers about ways to become fully integrated into the banking system.
The Benefits of Being Banked
Families who lack access to the financial mainstream may opt to rely on alternative financial services (AFS) providers, such as non-bank check cashers, payday lenders or pawn shops—many of which may lack consumer protections and can be costly for those struggling to make ends meet.
Access to an account at a federally-insured institution provides households with the opportunity to conduct basic financial transactions, save for emergency and long-term security needs, build credit history, and access credit on fair and affordable terms.
Participation in the banking system also protects households from theft and reduces their vulnerability to discriminatory or predatory lending practices. In addition, households that use non-bank financial services providers do not receive the full range of consumer protections available through the banking system. Despite these benefits, many people, particularly low-to-moderate income households, do not access mainstream financial products, such as bank accounts and low-cost loans. Other households have access to a bank account, but nevertheless rely on non-bank financial services providers.
FDIC’s Role
The FDIC is committed to expanding economic inclusion in the financial mainstream by ensuring that all Americans have access to safe, secure, and affordable banking services. As part of this effort, the FDIC works to fill the research and data gap regarding household participation in mainstream banking and the use of non-bank financial services.
To this end, the FDIC regularly conducts the FDIC National Survey of Unbanked and Underbanked Households. This survey estimates the proportion of households that do not participate in the banking system, or have a relationship with a federally -insured institution but also remain underbanked by virtue of their reliance on alternative financial services (AFS) providers.
The FDIC also conducts the FDIC Survey of Banks’ Efforts to Serve the Unbanked and Underbanked, oftentimes referred to as the “bank survey” to analyze banks’ strategies, offerings, and challenges in meeting the needs of underserved consumers.
Additionally, the FDIC has developed a series of pilot programs, campaigns, alliances, and other initiatives designed to increase services offered by banks and promote financial education among unbanked and underbanked consumers. View the links below to learn more about the FDIC’s efforts in this space:
Visit our Initiatives page to learn more about FDIC's pilot projects, partnerships, and financial education efforts.