Online Banking Is the Norm

The use of online banking is nearly universal in the United States today, according to FINRA's latest National Financial Capability Study. Fully 84 percent of Americans with bank accounts use online, computer-based (laptop or desktop) banking at least sometimes. The 59 percent majority uses online, computer-based banking frequently.

Mobile banking is also now the norm. Fully 65 percent of Americans with bank accounts say they use their phone to bank at least sometimes, and 42 percent do so frequently.

Online banking using a laptop or desktop computer does not vary much by age, while mobile banking is much more common among young adults...

Use online banking via a laptop or desktop computer
Aged 18 to 34: 87%
Aged 35 to 54: 85%
Aged 55-plus: 81%

Use mobile banking via a smartphone
Aged 18 to 34: 87%
Aged 35 to 54: 74%
Aged 55-plus: 42%

A substantial portion of the population uses smartphones to pay at point of sale, with 35 percent doing so at least sometimes. About the same percentage (37 percent) use their phones at least sometimes to transfer money to another person—such as through the Venmo or Zelle apps. Younger adults are most likely to do these things. Among 18-to-34-year-olds, 53 percent have used their mobile phone to pay at point of sale, and 60 percent have transferred money to another person using their phone. Among people aged 55 or older, the figures are just 17 and 15 percent, respectively.

Source: FINRA Investor Education Foundation, The State of U.S. Financial Capability: The 2018 National Financial Capability Study

No Credit Card, No Bank Account

As stores across the nation experiment with going cashless, they are shutting their doors on a significant share of the population—those without credit cards or bank accounts. Overall, 19 percent of adults (and their spouses) do not have a credit card and 6 percent do not have a bank account, according to a Federal Reserve Board survey. The share without credit cards or bank accounts is much higher in some demographic segments...

Percent without a credit card
39% of those with household incomes below $40,000
31% of those with no more than a high school diploma
32% of Blacks
28% of Hispanics

Percent without a bank account
14% of those with household income below $40,000
13% of those with no more than a high school diploma
14% of Blacks
11% of Hispanics

Source: Federal Reserve Board, Report on the Economic Well-Being of U.S. Households in 2018 

7% of Households Do Not Have a Bank Account. Why?

Seven percent of U.S. households are "unbanked," meaning they have no bank or credit union account. Researchers at the Federal Reserve Bank of New York examined the geography of the unbanked to determine the reason why—in particular, they wanted to know whether households lack bank accounts because they live in a "banking desert." Similar to food deserts (neighborhoods without grocery stores), banking deserts are neighborhoods without physical banks. In the study, the researchers defined a neighborhood as a census tract and the area within 10 miles of the census tract's center.

Several interesting findings emerged from the study. 1) Most banking deserts are in actual deserts. "Our map of U.S. banking deserts reveals that most are not in urban areas, where financial exclusion may be endemic, but in actual deserts—largely in the sparsely populated rural West," explain the researchers. 2) There is no correlation between the percentage of a state's population that lives in a banking desert and the share of the population that is unbanked. The physical location of banks, then, does not explain the unbanked. The results of a 2015 FDIC survey, cited by the researchers, also suggests physical location of banks has little to do with the unbanked. In the survey, the unbanked were asked why they did not have a bank account. Only 2 percent said it was because of "inconvenient location." More important reasons were "not enough money," "don't trust banks," and "account fees too high."

Source: Federal Reserve Bank of New York, Liberty Street Economics, The 'Banking Desert' Mirage