New Frontiers in Financial Inclusion

*​​​This article was sponsored by Wells Fargo. All views, language, and endorsements expressed are solely the work of the author and do not necessarily reflect the views or endorsements of the Financial Health Network.

In November 2024, the FDIC released their biennial National Survey of Unbanked and Underbanked Households. What it shows is a financial inclusion picture that is evolving, and gives the industry, including Wells Fargo and our partners, insight towards improving access to financial services.

For starters, there’s good news. The data shows that the unbanked rate has been falling for 10 years. This drop is likely driven in part by the advent of mobile banking, which has reduced costs for financial institutions and mitigated exclusion caused by geography and time, among other factors, while – when deployed best – increasing personalization. Indeed, half of banked households now use mobile banking as a primary account access method. Another likely driver is the promotion of low cost, accessible accounts, including Bank On certified deposit products like Wells Fargo’s Clear Access Banking. After all, concerns over the cost of banking and trust have consistently been the main reasons people have cited for being unbanked.

Even as the industry celebrates this progress, the latest report reveals more work that needs to be done – frontiers for us to focus on before the next survey is released, likely in the fall of 2026.

First, to make further inroads, we need to recognize and account for key and different characteristics of the remaining unbanked households. While the FDIC report shows us the 10- year trend lines have gone down, we may have hit a plateau. Today, 5.6 million (4.2%) of U.S. households are unbanked, statistically the same as in 2021 (5.9MM). This population may require a different set of tactics. The “last mile” unbanked households are very low income, more likely to be older, diverse, increasingly cash only, and report high distrust in banking. In fact, some demographic slices report much higher rates of being unbanked: 11.2% of people living with disabilities and 13.4% of single moms are unbanked compared to 3.7% of the general population.

In addition, credit gaps must be addressed. Despite a boom in new kinds of lending products, access to credit remains a significant gap, particularly among unbanked and underbanked households. As demonstrated by the relatively high reported use of more expensive credit alternatives, the data speaks to a strong demand for credit. Yet 15.7% of all households still do not have access to mainstream credit.

This gap in credit may help explain why the underbanked rate is the same as 2021 (14.2% both years). It seems evident that a significant portion of the population may have bank accounts but are not able to obtain credit from their banks. As discussed in depth in OCC’s Project REACh – in which Wells Fargo is a participant – credit building tools and alternative underwriting is a start. Those committed to financial inclusion will be looking to develop mainstream, safe, and affordable solutions that help people finance their dreams and alleviate cash flow challenges while protecting them from harmful debt that can block wealth building.

Second, addressing gaps for these subgroups may require more individualized strategies. For example, people living with disabilities often do not open bank accounts to avoid asset limits that would cap their benefits. ABLE accounts offer a solution to this barrier and Wells Fargo is proud to support public awareness-building efforts for ABLE. Further, government-to people and employer payments also present teachable and connective moments for lower income, excluded households. For instance, as part of the Banking Inclusion Initiative, Wells Fargo partners with financially responsible fintechs that deliver public sector payments to beneficiaries and in-turn, their customers can access cash via Wells Fargo ATMs at no cost from the bank.

Additionally, policy solutions may be required. Wells Fargo joined in support of the U.S. Treasury’s call for a National Financial Inclusion Strategy to increase government agency and policymaker dialogue around financial inclusion. Furthermore, well-designed education and awareness campaigns are key. After all, as we contemplate chipping away at the apparent plateau, 70.9% of the unbanked report NOT being interested in opening a bank account. These could be described as the “comfortably unbanked” who rely on friends and family when they need banking services, don’t mind paying or risking more to transact in cash because they feel more in control, believe this is more private, and are a long way from seeing a value proposition to banking. The other approximately 30% of unbanked consumers say they are open to banking and often are not banked because of experienced or perceived barriers such as cost or ID requirements. For both groups, we believe awareness building campaigns and financial coaching can play a role. However, campaigns and efforts to reach these unbanked groups must be designed differently and have different success metrics.

Third, banks need to consider the mobile experiences consumers are seeking along with how they feel about bundled offerings compared to diversified solutions. The data affirms what many banks already know: Banks are competing with non-bank fintechs and P2P payments options. The report shows this is particularly true among lower income and underserved customers. Payment app usage is up, and these apps are supplementing the needs of the banked, and are being used by underbanked and unbanked households, specifically to pay bills, receive income, make purchases, and save or keep money safe. This implies a missed opportunity for traditional financial institutions.

A potential opportunity to attract unbanked and underbanked consumers could be offering improved access to credit through a relationship with a bank, given the gaps. Additionally, at Wells Fargo, we see opportunity in how we leverage our continued brick-and mortar advantage against digital players, while thinking about innovative ways to use these spaces. We offer strong in-person and digital experiences, uniting our knowledgeable front-line employees in our branches and ATMs with a positive Wells Fargo app experience. After all, branches and ATMs still see demand, particularly among households with lower incomes, less education, older households, and rural households. Almost everyone wants to do something in person occasionally with 91% of banked households reporting at least one trip to a branch in the last 12 months in the FDIC data.

Finally, the report tells us that some of the buzziest solutions of the last few years may not be delivering huge results. Interestingly, “buy now, pay later” and crypto, despite the hype, are not dramatic drivers of financial inclusion or tools for daily transactions, but they may be wealth-building and income volatility management tools for the underbanked. Looking forward to hearing about other industry takeaways and how they too are tackling these opportunities at EMERGE 2025!