What's Happening?
The Bank On initiative, led by the nonprofit Cities for Financial Empowerment Fund, has significantly increased the number of Americans with access to banking services. In 2024, 4.8 million new Bank On accounts
were opened, marking a 27% increase from the previous year, according to the St. Louis Federal Reserve. This initiative collaborates with financial institutions nationwide to offer affordable and safe Bank On certified accounts to unbanked and underbanked individuals. By the end of last year, there were over 14 million active accounts. The initiative aims to provide basic banking services to help individuals achieve economic stability and build generational wealth. Without a bank account, households face challenges in saving, managing financial transactions, and accessing affordable credit.
Why It's Important?
Access to banking services is crucial for economic stability and wealth building. The initiative addresses the needs of unbanked and underbanked individuals, who often rely on expensive alternative financial services. By providing low- to no-fee accounts, the initiative helps integrate more people into the mainstream financial system, reducing reliance on costly services like payday loans and check-cashing. This is particularly important for the 42% of households considered asset-limited and income-constrained. The initiative also supports community growth by aiding small businesses and providing financial coaching during economic disruptions, such as government shutdowns. Overall, the initiative helps reduce financial exclusion and promotes economic empowerment.
What's Next?
The continued expansion of the Bank On initiative is expected to further reduce the number of unbanked and underbanked individuals in the U.S. Financial institutions involved in the initiative will likely continue to develop and promote products that cater to the needs of these populations. Additionally, community-based credit unions may play a larger role in providing personalized financial services and support. As more individuals gain access to banking, there may be increased opportunities for financial education and literacy programs to help new account holders effectively manage their finances and build wealth.
