The Road to Financial Inclusion: Depoliticizing Banking Through a Universal Service Requirement
Posted on Mar 7, 2026The United States faces an unbanked problem. Compared with similarly situated countries, the U.S. has a lower rate of access to banking services, with the percentage of unbanked households – households that do not have a checking or savings account at a bank or credit union – being higher for low-income and racial and ethnic minorities.[1]In the 2023 FDIC National Survey of Unbanked and Underbanked Households, 4.2 percent of U.S. households – representing about 5.6 million households – were unbanked.[2] Frequently cited reasons were not having enough money to meet minimum balance requirements and not trusting banks. An additional 14.2 percent of households – representing about 19 million households – were underbanked (banked households that use nonbank products, i.e., nonbank money orders and check cashing, to meet their financial needs).[3] The costs of maintaining a bank account, such as meeting minimum balance requirements and high fees, often deter households from having an account or continuing with an existing one. These individuals are also often discriminated against by banks whose sophisticated cost accounting allows for the categorization of customers based on their profitability.[4]
The United States also faces political conflict over debanking. This is the involuntary closure of a customer’s bank account, or when a customer is denied access to financial services due to risks associated with banking the customer. This often includes organizations deemed to pose financial or reputational risk to the bank. Unlike the unbanked population, this group faces debanking when the financial institution ceases banking with them, or the government pressures the financial institution to close the account of a customer.[5] On August 7, 2025, President Trump signed the Executive Order (“the Order”) “Guaranteeing Fair Banking for All Americans,” addressing the debanking of conservative groups, gunmakers, and crypto firms. While these groups face governmental debanking, few customers have explicitly cited their political affiliation as the reason for being denied access to banking products.[6]Nonetheless, the Order requires bank regulators to remove, as far as permitted by law, reputation risk from their evaluations.[7] As of late 2025, bank regulators have proposed removing or refraining from using reputational risk as a component in evaluations, and instead replacing those references with more specific discussions on material financial risk.[8] The Order is an attempt by the administration to restrain how political and religious ideology may impact a customer’s access to financial services.
To achieve financial inclusion, it is critical to ensure everyone can participate in the banking system, regardless of socioeconomic status or views. A basic universal service requirement provides a targeted approach for increasing the accessibility of the banking system. While efforts to address the accessibility issue have focused on developing relationships between these groups and banks with the help of private and nonprofit organizations, alternative proposals have advocated for remodeling the banking system. Universal service in the form of providing “basic bank accounts” is a potential solution.[9] This incorporates concepts commonly associated with utility industries, such as electricity and water. The principle of universal service has its origins in the United States with the establishment of the Federal Communications Commission (FCC) under the Communications Act of 1934 to provide access to those services.[10]Guaranteeing affordable access to services was achieved by creating “a regulated, public monopoly” with “geographical availability,” thus imposing universal service obligations.[11]
Today, universal service is understood generally to be “the minimum set of services of specified quality to which all users and consumers have access in the light of specific national conditions, at an affordable price.”[12]Universal service comprises four characteristics: a minimum set of services, quality, availability to all users, and affordability.[13] While banks have received some oversight and regulation from regulators, they have largely been able to remain privatized.[14] Banking law has emphasized promoting stability, which deemphasizes other considerations like protecting consumers.
Expanding the universal banking model to encompass the unbanked as well as the debanked groups would ensure universal service benefits individuals and firms historically evaluated by institutions as controversial to do business with. The basic model would emphasize increased regulatory safeguards and limit the independence of banks to determine public accessibility. These accounts should be implemented federally to ensure uniform services, irrespective of location. Basic bank accounts would not require customers to meet a minimum balance requirement and would lower the costs of maintaining a bank account. By eliminating reasons commonly cited as preventing unbanked customers from opening and holding an account, greater portions of the public will be more confident in their ability to have an account. While instilling trust in the banking system is important, implementing the basic model should not rest solely on external sectors such as nonprofit and private organizations. The government should be the primary supervisor of banks and should regulate the private sector as opposed to placing the burden entirely on the private industry, which would further perpetuate the problem.
Imposing a basic service financial infrastructure presents a means for managing risk in a way that does not ostracize or completely shut out a client. Banks will continue to observe material risks that exist with an account, but the holder will retain the ability to continue banking with the institution. The core functions of banks will remain intact. Banks would carry on as “neutral agents channeling the sovereign public’s full faith and credit to its most productive uses in the economy.”[15] Basic account service will permit banks to fully realize their longstanding function as an intermediary, managing the flows of funds between consumers.[16] Rather than focusing solely on profitable customers who are ready to pay for their services, banks will extend the fund portfolio being managed to include those previously pushed out.
In a system where profit is the goal, some are often left behind. But when that system entails essential services necessary for accessing basic means in society, it cannot be left to business-as-usual. Calls to implement financial inclusion are gaining ground, and adopting a universal service standard in banking presents a solution for minimizing the disparities that exist for debanked and unbanked groups.
[1] Paola Boel and Peter Zimmerman, Unbanked in America: A Review of the Literature, Fed. Rsrv. Bank of Cleveland (May 26, 2022), https://www.clevelandfed.org/publications/economic-commentary/2022/ec-202207-unbanked-in-america-a-review-of-the-literature[https://perma.cc/T7UC-96JS].
[2] 2023 FDIC National Survey of Unbanked and Underbanked Households, Fed. Deposit Ins. Corp., https://www.fdic.gov/household-survey[https://perma.cc/554K-BRE6] (last visited Mar. 2, 2026).
[3] Id.
[4] Boel & Zimmerman, supra note 1 (“In the late 1980s, increased computing power and growing sophistication in cost accounting made it possible for banks to categorize individual customers based on their profitability. Banks began to charge higher fees for account services and overdrafts so that even low-balance accounts would be profitable on a stand-alone basis.”).
[5] Nicholas Anthony, Two Types of Debanking: Operational and Governmental, Cato Inst. (Feb. 4, 2025), https://www.cato.org/blog/two-types-debanking-operational-governmental [https://perma.cc/M79B-LB5J] (“Operational debanking is what occurs when a financial institution chooses to close the account of a customer because it is no longer in the institution’s individual interest...Governmental debanking can occur in two forms. The first form occurs when the government explicitly instructs a financial institution to close an account. This instruction can be as casual as a letter or as formal as a court order. The second form of governmental debanking, however, is more abstract. It involves the use of laws and regulations to make it increasingly harder to serve customers.”).
[6] See Ross Kerber, Just 35 complaints of Debanking Cite Political Bias Despite Trump Order, Reuters (Aug. 19, 2025), https://www.reuters.com/legal/transactional/just-35-complaints-debanking-cite-political-bias-despite-trump-order-2025-08-19/ (A review by Reuters shows that “out of the 8,361 detailed complaints about closed bank accounts filed with the CFPB since the agency began taking them in 2012, only 35 include the terms “politics,” “religion,” “conservative,” or “Christian.”). Nicholas Anthony, Understanding Debanking: Evaluating Governmental, Operational, Political, and Religious Financial Account Closures, Cato Inst. (Jan. 8, 2026), https://www.cato.org/policy-analysis/understanding-debanking-evaluating-governmental-operational-political-religious [https://perma.cc/RJT8-DYT4].
[7] Guaranteeing Fair Banking For All Americans, The White House (Aug. 7, 2025), https://www.whitehouse.gov/presidential-actions/2025/08/guaranteeing-fair-banking-for-all-americans/ [https://perma.cc/V4MX-XHHQ].
[8] Proposal Regarding Prohibition on Use of Reputation Risk by Regulators, Fed. Deposit Ins. Corp. (Oct. 7, 2025), https://www.fdic.gov/news/speeches/2025/proposal-regarding-prohibition-use-reputation-risk-regulators [https://perma.cc/E5L6-PYY7] (This proposal would not impose new requirements on supervised institutions but would prohibit institutions from closing accounts on the basis of political, social, cultural, or religious views); Federal Reserve Board Announces that Reputational Risk Will No Longer be a Component of Examination Programs in Its Supervision of Banks, Fed. Rsrv. (June 23, 2025), https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250623a.htm [https://perma.cc/45YK-MR4V].
[9] P.W.J de Bijl, E.E.C. van Damme, S. Janssen, & P Larouche, Universal Service in Banking, TILEC Tilburg (2005), https://research.tilburguniversity.edu/en/publications/8c9fbcf2-01cb-4d0f-9f5c-13e601b84399 [https://perma.cc/7E2U-KD2T].
[10] Universal Service, Fed. Commc’ns Comm’n, https://www.fcc.gov/general/universal-service [https://perma.cc/8R2C-MAM3] (last visited Jan. 11, 2026); see also de Bijl et al., supra note 9, at 13 (“The notion of universal service was introduced in the US in 1934 in order to make a case for AT&T’s monopoly position in telephone.”).
[11] de Bijl et al., supra note 9, at 7.
[12] Id. at 10; Communication from the Commission: Services of General Interest in Europe, Off. J. of the Eur. Cmtys. at para. 39 (April 17, 2001), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52001XC0119%2802%29 [https://perma.cc/MM2G-5WE3].
[13] de Bijl et al. at 10.
[14] Id. at 8 (“This is not to say there is no regulation in the banking industry… however, while in utility industries, the regulations are motivated by the network characteristics (large sunk investments leading to natural monopolies), the regulations in the banking sector are very different and are motivated by other types of market failures: externalities and information problems.”).
[15] Saule T. Omarova & Graham S. Steele, Banking and Antitrust, 133 Yale L. J. 1162, 1179, 1224 (2024), https://yalelawjournal.org/pdf/133.4.OmarovaSteeleFinalDraft_s7ndu2fm.pdf [https://perma.cc/PNN8-TQQM]
[16] Robert C. Hockett & Saule T. Omarova, The Finance Franchise, 102 Rev Cornell L. Rev. 1143 (2017), https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2660&context=facpub [https://perma.cc/SRL8-LY7J].