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The FDIC’s NEW Advisory Committee on Community Banking

Posted by Wendell Brock on Fri, Oct 16, 2009

In May of 2009, the FDIC authorized the creation of an Advisory Committee Community Banking with the purpose that this committee would help the FDIC understand the particular issues that small rural and urban community banks face in the ever-changing financial landscape.

The committee is consists of no more than 20 volunteer members from the community banks around the country along with small business, education, non-for-profit organizations and other individuals that use the services of these community banks. It is expected that the committee will have an annual budget of $300,000 and two full time FDIC staff people committed to serving their needs. The committee charter will last for two years unless it is renewed by the FDIC. The committee will also report directly to the Chairman of the Board of Directors of the FDIC.

The committee's first meeting was this week and below is the press release from that meeting. At the bottom is a link to the FDIC website where more information may be obtained about the meeting. We hope this positive for the community banking sector as they struggle under the weight of very difficult regulations, limited budgets, and with razor thin margins. They are scheduled to meet twice a year, so the next meeting should be in April.

Press Release from the Advisory Committee on Community Banking

At its first meeting since being established by the FDIC Board in May, the FDIC's Advisory Committee on Community Banking today discussed the impact of the financial crisis on community banks. Other issues addressed were regulatory reform proposals under consideration by Congress and their effect on community banks, the impact of FDIC supervisory proposals on these banks, and community banks' perspectives on funding the FDIC's Deposit Insurance Fund.

"I was extremely pleased with the robust discussion among our committee members on issues that are so critical to both the FDIC and our nation's community banks," said FDIC Chairman Sheila C. Bair. "The committee members voiced a number of interesting ideas that they will pursue."

The Advisory Committee was formed to provide the FDIC with advice and recommendations on a broad range of policy issues with particular impact on small community banks throughout the nation, and the local communities they serve. The committee is comprised of 14 community bankers from across the country, and one representative from academia.

"We are fortunate to have so many highly respected professionals who are willing to volunteer their time and talents to help the FDIC analyze the issues most important to community banks," said Paul Nash, Deputy to the Chairman for External Affairs, and the Designated Federal Official for the Advisory Committee on Community Banking.

The members' opinions on the FDIC's proposed rulemaking to prepay three years of deposit insurance assessments will be included in the public comment file.

For more information on the Advisory Committee on Community Banking please visit

Topics: FDIC, Community Bank, Banking industry, Bank Regulators, Commercial Banks, Regulations, Bank Regulations, FDIC Advisory Committee

Talk Shop with the FDIC: Open Meeting to Discuss Unbanked Customers

Posted by Wendell Brock on Tue, Feb 03, 2009

The FDIC Advisory Committee on Economic Inclusion (ComE-IN) will hold a public meeting this week to discuss ways that the banking community can reach out to currently underserved households. The meeting will be held on February 5, 2009, between 8:30 a.m. and 4:00 p.m. in the FDIC Board Room; it will also be viewable via webcast at


The topic of underserved or “unbanked” customers has been a prominent discussion point in the banking industry for several years. These are individuals or households that rely on non-banking institutions, such as check-cashing stores or even retailers, to conduct regular monetary transactions. Generally, these unbanked customers absorb considerably higher transaction costs than if they maintained a traditional depositor relationship with a bank.


Sizeable market opportunity

The Center for Financial Services Innovation estimates that there are nearly 10 million unbanked households, spending roughly $13 billion per year on non-bank financial transactions. Clearly, this represents a sizeable market opportunity for traditional banks. Unfortunately, understanding how to reach these customers with a compelling service offering continues to be something of an unsolved mystery.


Research indicates that many of the unbanked group have previously had traditional banking relationships. At some point, these individuals became disgruntled with the banking system and chose to leave it voluntarily. Key Bank learned this in 2004 through a series of focus groups—respondents indicated they’d had bad experiences with banks, often involving high fees for minor transactions.


A research report based on the PaymentDynamics 2007 Preferred Payments Study makes a similar conclusion, but adds that the unbanked group is not one homogenous demographic, but “a collection of smaller segments, each with its own unique demographics and financial characteristics.” That conclusion supports the notion that effectively pursuing unbanked households as a customer segment demands a multifaceted approach. The PaymentDynamics report is available here:


Reaching out, improving access

Both the banks and unbanked consumers stand to benefit from the development of products and services that will appeal to this customer group. The customers will save money on their financial transactions and begin moving down a more traditional path of wealth-building. Banks will enjoy a larger customer base, and many of those new customers can be directed into conventional banking services over time. The challenge lies in creating products and services that meet the bank’s profit hurdles while addressing the needs and lifestyles of this customer group.


To learn more about this underserved market and the role it will play in the banking industry going forward, log-on to the FDIC Advisory Committee meeting webcast on Thursday. Scheduled discussions will include an overview of the FDIC’s Unbanked Survey and a review of the banking industry’s successful efforts to date in reaching the unbanked customer.

Topics: FDIC, market opportunity, unbaked, public meeting, FDIC Advisory Committee

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