(Bloomberg) -- Of American households with bank accounts — and that’s nearly all of them — a record 48.3% primarily use their mobile phones for routine banking, according to new data from the Federal Deposit Insurance Corp. Combined with those who prefer a computer or tablet, more than two out of three US households preferred digital banking in 2023.
The FDIC reported the continued increase for mobile services in its Survey of Unbanked and Underbanked Households, a biennial measurement of how Americans use banking and financial services that is part of the agency’s goal to “expand economic inclusion.”
Despite the growing popularity of mobile banking overall, the agency noted that older households and lower-income households were less likely to bank via smartphone. “While many of these households are already banked, they may become disengaged if they are perceived to be unwilling or unable to keep up with technological advancements in banking,” the FDIC wrote, cautioning banks against catering too much to early adopters.
Its primary focus is the households that don’t have bank accounts and therefore may rely on more expensive products and services like check cashing or payday loans. After falling steadily from more than 8% in 2011 to 4.5% in 2021, the share of unbanked households remained flat overall, with a slight drop among Black households and a notable spike for American Indian or Alaska Native households.
“Access to safe, affordable bank accounts is fundamental for consumers to be able to participate in and benefit from our nation’s economy,” said FDIC Chair Martin Gruenberg. “This survey reveals that significant disparities in access to the banking system for minority, lower income, disabled, and single-parent households still exist and need to be addressed.”
Between 2021 and 2023, use of nonbank online payment services such as PayPal, Venmo, or Cash App increased, while the use of general purpose reloadable prepaid cards decreased, the FDIC said. Also, compared with banked households, unbanked households’ use of nonbank online payment services and prepaid cards as a substitute, rather than to supplement, a bank or credit union account, it found.
For the first time, the survey of more than 30,000 households included a question about the short-term loans known as “buy now, pay later,” which allow consumers to make installment payments on purchases. Nearly 4% of households said they’d used the modern layaway program in the past 12 months.
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