Remarks at the Twelfth FDIC Consumer Research Symposium

Good morning and welcome to the twelfth FDIC Consumer Research Symposium. This event is a valuable opportunity for the FDIC to connect with and learn from the larger research community. Your participation today helps inform our understanding of consumers' capabilities, knowledge, and preferences for financial services, as well as their experiences in the market.

The FDIC's interest in these topics is more than academic. The knowledge we gain in these areas informs our supervisory and regulatory policies, and helps the FDIC to meet its responsibility for maintaining stability and public confidence in our nation's financial system. Research is integral to the functioning of the FDIC. In fact, the agency has had a research function dating back to its inception, in 1933. Then, as now, the agency looked to researchers and analysts to help it understand the challenges facing the nation's financial system.

When the FDIC established its Division of Depositor and Consumer Protection in 2011, it gave it responsibility for conducting consumer research. By locating this research program within our consumer division, the FDIC advances two objectives. First, it ensures that researchers are well-positioned to stay informed about the evolving landscape of consumer financial services and related policies. Second, it connects researchers directly with the examiners, community affairs professionals, and policy makers that need to learn from and support their work.

Over the years, the FDIC's consumer research program has made numerous substantive contributions to the field. Perhaps its best-known effort is the FDIC National Survey of Unbanked and Underbanked Households.

This survey, conducted every two years in cooperation with the Census Bureau, has been foundational to understanding who is unbanked and underbanked in America. It provides authoritative data that detail household participation in the banking system. For example, our 2021 survey documented that 4.5 percent of households were unbanked – meaning that they did not have a checking or savings account at a federally insured bank or credit union. It also revealed that an additional 14.1 percent were underbanked, in that they held a bank account, but also used nonbank products and services to address basic financial needs.

The survey's relatively large sample size, typically in excess of thirty thousand observations, has allowed the FDIC to make measurements at the state level and for larger metropolitan areas. Critically, it has enabled it to break down the unbanked and underbanked population demographically to reveal large disparities in access to the banking system. In 2021, 11.3 percent of Black households were unbanked, as were 9.3 percent of Hispanic households, 13.5 percent of households with income under $30,000 per year, 14.8 percent of working-age households with a disability, and 14.9 percent of single-parent families. These rates are all far in excess of the baseline 4.5 percent overall unbanked rate.

This type of granular data is part of what has made the survey an indispensable resource not just to the FDIC, but to bankers, community groups, policy makers, researchers, journalists and many others who are interested in ensuring the U.S. banking system is inclusive for all households.

Beyond providing these authoritative measurements, the survey also offers insights into opportunities to expand and support economic inclusion. The most recent survey report was based on data collected during June 2021, in the midst of a still growing COVID-19 pandemic. The research team included a number of questions relevant to that context. Through these questions, we learned that one-third of all households that had recently opened a bank account connected receipt of an economic impact or similar public payment to their decision to open an account.

It makes some sense that households looking to receive such a large payment would be particularly motivated to have a bank account so that they could receive the payment in a secure and timely manner, i.e. electronically. Consider the costs, inconvenience and risks involved with not receiving such a payment by direct deposit, including the risk of a check being misdirected in the first place.

We have come to think of such occasions as “bankable moments” and have endeavored to apply the concept. For instance, in 2023, the FDIC partnered with the US Treasury to include information on the benefits and options for opening a bank account along with 6.2 million federal checks that were already being mailed to consumers.

In addition to informing our programs, FDIC researchers are regularly thinking about the next research opportunity. Following up on the same “bankable moments” theme, our research team designed and recently conducted a survey of Volunteer Income Tax Assistance – or VITA – providers. VITA providers offer free tax filing assistance to low-income consumers. They often help these individuals and families file to claim an earned income tax credit payment. This payment is usually the largest that most of these families will receive in a year. Consequently, understanding how VITA providers are working to connect consumers with bank accounts and learning about any obstacles holding them back is a key opportunity. We reached out to almost 500 VITA sites and garnered a 72 percent survey response rate. We look forward to releasing a full report on that study in the second quarter.

In addition to designing, conducting and reporting on these major research initiatives, our researchers contribute to the literature and invest in the research community. Our researchers are also, of course, the driving force behind this symposium. They craft and publicize our call for papers, have read (and in many cases re-read) more than 160 submissions for this conference. They have debated and discussed potential panels and identified thoughtful discussants.

Having acknowledge as much, I would like to invite you to please join me in recognizing the work of those who have made today possible, including Ryan Goodstein, Garret Christensen, Connor Redpath and Noah Shult, along with Yan Lee ( Note: Yan rhymes with John ), their Assistant Director. I would also like to express my appreciation for the efforts of our Special Events team and to the presenters, discussants, and moderators who have come prepared for what I am sure will be an engaging set of panels.

I have had an opportunity to read summaries of the papers that will be discussed today and it is clear that the sessions will be informative. I am particularly pleased to see that Annamaria Lusardi, one of the preeminent scholars on financial literacy, will be speaking.

I won't delay you further from your agenda. I hope my brief comments have underscored the importance of consumer research at the FDIC. I wish you all the best of luck with the program and hope you will continue to return for future FDIC symposiums.