Remarks by
Martin J. Gruenberg, Chairman,
Federal Deposit Insurance Corporation
at
Youth Savings Pilot Symposium,
Learning to Save, Saving to Learn
Arlington, VA
October 21, 2016
Good morning and welcome.
This is an important event in the FDIC’s ongoing work to support the financial education
of young people as part of our agency’s mission to promote financial inclusion. Today
brings together most of the banks in our Youth Savings Pilot, as well as some of the
educators and nonprofit partners working with these banks. Through you, we at the
FDIC are learning how financial institutions, educators, and others can help build the
financial capability of young people by linking financial education with safe, hands-on
savings opportunities. I want to thank you for this engagement and for sharing your
experiences.
Knowledge and Access Lead to Inclusion
The FDIC’s work with America’s youth is one part of our efforts to expand access to,
and use of, mainstream financial institutions by unbanked and underbanked households
in the United States.
Increasing households’ access to safe, secure, and affordable banking services
improves their ability to build assets and create wealth. It also makes them less
susceptible to discriminatory or predatory lending practices, and can provide a financial
safety net against unforeseen circumstances. Through a banking relationship,
consumers can take an important step toward full participation in our economy. Also,
when households find that the banking system treats them fairly and helps meet their
needs, public confidence in the banking system grows stronger. For all of these
reasons, a key component of the FDIC’s work is to support efforts to expand economic
inclusion.
To inform our work in this area, the FDIC, in partnership with the Census Bureau,
conducts a national survey of unbanked and underbanked households every two years.
Our latest survey, released just yesterday, shows that unbanked and underbanked rates
continue to be high among low-income, young, Black, and Hispanic households.1 For
example, our survey shows that 13 percent of younger households2 did not have a
bank account—almost twice the national average. Another 29 percent of younger
households were “underbanked,” meaning they had a bank account, but still looked
outside the banking system to meet transaction or credit needs.
Martin J. Gruenberg, Chairman,
Federal Deposit Insurance Corporation
at
Youth Savings Pilot Symposium,
Learning to Save, Saving to Learn
Arlington, VA
October 21, 2016
Good morning and welcome.
This is an important event in the FDIC’s ongoing work to support the financial education
of young people as part of our agency’s mission to promote financial inclusion. Today
brings together most of the banks in our Youth Savings Pilot, as well as some of the
educators and nonprofit partners working with these banks. Through you, we at the
FDIC are learning how financial institutions, educators, and others can help build the
financial capability of young people by linking financial education with safe, hands-on
savings opportunities. I want to thank you for this engagement and for sharing your
experiences.
Knowledge and Access Lead to Inclusion
The FDIC’s work with America’s youth is one part of our efforts to expand access to,
and use of, mainstream financial institutions by unbanked and underbanked households
in the United States.
Increasing households’ access to safe, secure, and affordable banking services
improves their ability to build assets and create wealth. It also makes them less
susceptible to discriminatory or predatory lending practices, and can provide a financial
safety net against unforeseen circumstances. Through a banking relationship,
consumers can take an important step toward full participation in our economy. Also,
when households find that the banking system treats them fairly and helps meet their
needs, public confidence in the banking system grows stronger. For all of these
reasons, a key component of the FDIC’s work is to support efforts to expand economic
inclusion.
To inform our work in this area, the FDIC, in partnership with the Census Bureau,
conducts a national survey of unbanked and underbanked households every two years.
Our latest survey, released just yesterday, shows that unbanked and underbanked rates
continue to be high among low-income, young, Black, and Hispanic households.1 For
example, our survey shows that 13 percent of younger households2 did not have a
bank account—almost twice the national average. Another 29 percent of younger
households were “underbanked,” meaning they had a bank account, but still looked
outside the banking system to meet transaction or credit needs.
Previous FDIC research suggests that conventional strategies—such as developing
targeted products and services—have not been as effective with unbanked audiences,
and that new strategies are necessary to establish trust and familiarity with the
unbanked.3
Building banking relationships in schools may be one such strategy. We know from a
Treasury Department study that students tend to have more positive attitudes toward
banks and are more likely to have a bank account if there is a branch of a federally
insured financial institution in their school.4 This held true even in schools with a
majority of low- and moderate-income students. In fact, the Treasury study found some
evidence that schools with a majority of low- and moderate-income students and a
financial institution branch on site had the same or better rates of financial participation
than similar schools with fewer economically disadvantaged students.5
This is an important finding because low- and moderate-income students are more likely
to be unbanked, so programs that focus on providing financial education and access to
this population can have a greater, long-term impact.
Lessons from the Youth Savings Pilot Program
To learn more about current approaches to fostering banking relationships with young
people, the FDIC launched the Youth Savings Pilot Program more than two years ago.
Through this program, the FDIC seeks to identify approaches that successfully combine
financial education with the opportunity to open a low-cost savings account for school-
aged children.
Twenty-one banks participated in the pilot, and generally speaking, these banks saw
their outreach programs grow to engage more young people. Approximately 4,672
youth savings accounts were opened by participating banks during the 2015–16 school
year.
Thanks to the efforts of many people in this room, we have learned that there are many
roads to success. Eight of the 21 of the banks in our pilot program chose to leverage
their relationships with schools or non-profit partners to generate greater interest in and
use of nearby bank branches. As part of a coordinated program, students visit a nearby
branch where bank personnel talk about banking issues and may also offer career
advice. This approach can help reduce any apprehension some young people may feel
when visiting a bank for the first time.
Other banks in the pilot program established a regular physical presence at a school,
where students could open accounts and make deposits. Five of the banks in our pilot
opened in-school branches, while eight banks set up operations in cafeterias or other
common areas on designated banking dates. This in-school presence made banks
more approachable for students. It also helped students develop planning and saving
skills, and introduced opportunities for peer-to-peer learning and teaching. In some
targeted products and services—have not been as effective with unbanked audiences,
and that new strategies are necessary to establish trust and familiarity with the
unbanked.3
Building banking relationships in schools may be one such strategy. We know from a
Treasury Department study that students tend to have more positive attitudes toward
banks and are more likely to have a bank account if there is a branch of a federally
insured financial institution in their school.4 This held true even in schools with a
majority of low- and moderate-income students. In fact, the Treasury study found some
evidence that schools with a majority of low- and moderate-income students and a
financial institution branch on site had the same or better rates of financial participation
than similar schools with fewer economically disadvantaged students.5
This is an important finding because low- and moderate-income students are more likely
to be unbanked, so programs that focus on providing financial education and access to
this population can have a greater, long-term impact.
Lessons from the Youth Savings Pilot Program
To learn more about current approaches to fostering banking relationships with young
people, the FDIC launched the Youth Savings Pilot Program more than two years ago.
Through this program, the FDIC seeks to identify approaches that successfully combine
financial education with the opportunity to open a low-cost savings account for school-
aged children.
Twenty-one banks participated in the pilot, and generally speaking, these banks saw
their outreach programs grow to engage more young people. Approximately 4,672
youth savings accounts were opened by participating banks during the 2015–16 school
year.
Thanks to the efforts of many people in this room, we have learned that there are many
roads to success. Eight of the 21 of the banks in our pilot program chose to leverage
their relationships with schools or non-profit partners to generate greater interest in and
use of nearby bank branches. As part of a coordinated program, students visit a nearby
branch where bank personnel talk about banking issues and may also offer career
advice. This approach can help reduce any apprehension some young people may feel
when visiting a bank for the first time.
Other banks in the pilot program established a regular physical presence at a school,
where students could open accounts and make deposits. Five of the banks in our pilot
opened in-school branches, while eight banks set up operations in cafeterias or other
common areas on designated banking dates. This in-school presence made banks
more approachable for students. It also helped students develop planning and saving
skills, and introduced opportunities for peer-to-peer learning and teaching. In some