As community banks seek to reach previously unbanked and underbanked customers, one financial institution is finding its footing through becoming a certified Bank On Checking institution.
Galesburg, Ill.,-based F&M bank announced Sept. 1 that it had met Bank On account standards for 2021-22. Launched in April 2012 at the New York Stock Exchange, Bank On Checking features zero overdraft or insufficient fund fees, the ability to pay bills and make purchases without checks, a $25 or less minimum deposit, $5 monthly cost and no minimum balance. Those standards, created by consumer advocates, national nonprofits, civic leaders and other financial institutions, designate core and strongly recommended features to ensure high functionality, low cost and consumer safety. Bank On is a platform of the Cities for Financial Empowerment Fund, which provides funding and technical assistance to mayors of coalition member cities to improve the financial stability of low- and moderate-income households.
Bank On Checking is available at all five F&M Bank locations in Galesburg, Brimfield and Peoria, Ill. Bank On accounts are available at more than 33,600 branches in all 50 states and Washington, D.C. Financial institutions with Bank On certified accounts represent more than 52 percent of the national deposit market share, and more than 115 other financial institutions with Bank On certified accounts are available throughout the country. Nearly 2 million Bank On certified accounts were opened in 2019.
“We’re pleased to be part of the growing Bank On movement to provide safe, affordable and accessible bank accounts to the roughly 6 percent of households that do not currently have one,” said Doug Sanders, president, F&M Bank Division.
The Bank On movement comes as nearly 5 percent of U.S. households do not have a checking or savings account. Nearly 11 percent of U.S. households are underbanked, meaning they still use fringe financial services such as payday lending. Low-income, Black and Hispanic households are disproportionately represented in these numbers: Nearly 34 percent of unbanked and 45 percent of underbanked households earn less than $30,000 per year. Nationally, 48 percent of Black households and 42 percent of Hispanic households are unbanked or underbanked compared to less than 14 percent of white households, according to Bank On.
Unbanked consumers report not having enough money to pay a minimum balance to open an account and ongoing distrust of financial institutions, including payday lenders and pawn shops that charge substantial fees for financial services that do not prove beneficial, according to the FDIC.