Overview of the Alliance for Economic Inclusion (AEI)

There are an estimated 28 million unbanked and 44.7 million underbanked people in the U.S. today, representing a potential market of 40 million households with little or no current relationship with a financial institution. Underserved consumers generate more than $1.1 trillion in annual income, of which unbanked consumers represent nearly $510 billion each year. The Center for Financial Services Innovation reports that Americans spend at least $10.9 billion on more than 324 million alternative financial transactions a year.

Economic barriers, such as lack of liquidity to carry account balances and bank fees; structural barriers (e.g., bad prior experiences, ChexSystems, lack of sufficient identification); and experiential barriers (unfamiliarity with banks or distrust of banks) are the most common reasons why people are unbanked. Unbanked and underbanked individuals rely on a mix of non-bank financial service providers for their needs and are willing to pay the high fees associated with these alternative providers in exchange for the convenience of locations and relative ease in cashing checks, paying bills and accessing cash.

By accessing the mainstream financial system, these households can build savings and improve their credit-risk profiles in order to lower their cost of payment services, eliminate a common source of personal stress, and gain access to basic financial services that promote asset accumulation.

The FDIC wants to provide an alternative to high-cost and often predatory financial products for low- and moderate-income individuals and families, including the unbanked and underserved. All consumers should have reasonable access to full service banking and other financial services. The Alliance for Economic Inclusion (AEI) can provide a gateway into the financial mainstream through:

• Enhancing the economic well-being of low- and moderate-income individuals and families, including the unbanked and underserved, by improving access to the U.S. banking system; and
• Working with financial institutions and other partners on ways to bring those currently unbanked and underserved into the financial mainstream through innovative low-cost products and services and expanded financial education efforts.