Federal Reserve Board Governor Michael Barr promotes low-cost bank accounts faster payments and small-dollar loans to advance financial inclusion

Federal Reserve Board Governor Michael S. Barr delivered brief remarks highlighting how access to safe, affordable bank accounts, faster payments, and bank-offered small-dollar loans can support financial inclusion, particularly for low- and moderate-income households. He also emphasized the potential role of underwriting based on alternative data such as cash flows in expanding access to credit for consumers with thin or no credit files. Barr pointed to the Bank On initiative, supported by the Cities for Financial Empowerment Fund, and noted that Bank On-certified accounts meet standards such as low minimum opening deposits and low maintenance, overdraft, and other unexpected fees. He also cited the Bank On National Data Hub hosted by the Federal Reserve Bank of St. Louis as a key dataset for understanding how institutions expand access to low-cost banking. On small-dollar liquidity needs, he referenced Federal Reserve survey analysis indicating that nearly 20 percent of adults would meet an unexpected USD 400 expense at least in part by selling something or using a payday loan, deposit advance, or overdraft, rising to 46 percent for households earning under USD 25,000. He described bank small-dollar loans underwritten using cash-flow information such as deposits and payments of rent and utilities as a way to provide a “second look,” broaden eligibility, and potentially reduce underwriting cost and time, while supporting reasonably priced and transparent credit.