There are many challenges facing hard-working families trying to maintain their way of life in rural America, but one of their greatest obstacles may be lack of access to a physical bank or credit union. Bank accounts are an important tool for financial stability for Americans of all income levels in all parts of the country. Having a bank account helps families save money securely, pay bills in a timely fashion, and better plan for their future financial needs. While many of us can drive a short distance, walk into a bank, and open an account, there are rural communities across our state and the country where physical bank locations are few and far between. Luckily, mobile banking is increasingly improving access to financial services and has become especially important for customers in rural areas.
Unfortunately, however, access to mobile banking products is not equal across the United States, as some state driver’s license laws prevent imaging of driver’s licenses, which in turn prevent banks and credit unions from offering their mobile account products in those states.
Fortunately, last week the House Committee on Financial Services passed my Making Online Banking Initiation Legal and Easy (MOBILE) Act of 2017, which creates equal opportunity for every American to open a bank account on a mobile device. This bill passed the committee with broad bipartisan support. The MOBILE Act will allow customers – if they so choose – to authorize a financial institution to make a scan or copy of their driver’s license or identification card in order to open a bank account on a mobile device. Simply stated, this legislation will level the playing field across the United States for anyone who wishes to open a bank account online. Additionally, this legislation is careful to protect consumer privacy information by requiring a financial institution to delete all copies of a driver’s license and personal identification after having used them for the permitted purpose.
The Federal Deposit Insurance Corporation (FDIC) estimates that as many as 67 million adult Americans are unbanked or underbanked and at heightened risk of exposure to monetary loss, fraud, and the high costs associated with alternative financial services. However, the Federal Reserve Bank of Boston found that 59 percent of unbanked individuals have access to mobile phones (50 percent of which are smartphones) and that 90 percent of underbanked individuals have access to a cell phone (56 percent of which are smartphones). By allowing those with smartphones to essentially have their bank accounts in their pocket, there are increased opportunities to improve access to bank accounts for customers across the United States, and by proxy, more opportunities to help families in rural America gain and sustain financial stability.
Evidence from the Federal Reserve shows that mobile banking use is rising in the United States at relatively fast rates. In 2016, when the Federal Reserve studied mobile banking use, it found that 43 percent of all mobile phone owners with a bank account had used mobile banking in the past twelve months, up from 39 percent in 2014 and 33 percent in 2013. Following this trend, the use of mobile banking will continue to rise at a quick pace, and that access is only further supported by the MOBILE Act.
All families should have the tools they need to achieve financial stability and prosperity. The MOBILE Act will help bring these tools to communities that, by virtue of being located in a rural area, may not have access to the traditional brick-and-mortar bank that many of us take for granted. I’m glad this bill has gained the attention and support of my colleagues on both sides of the aisle and I look forward to seeing it considered in the full House soon.
Congressman Scott R. Tipton represents Colorado’s Third District. He serves on the House Committee on Financial Services and the House Committee on Natural Resources. He is Vice Chairman of the Financial Services Subcommittee on Oversight and Investigations Tipton is the Executive Vice Chairman of the Congressional Western Caucus and Co-chairman of the Congressional Small Business Caucus.