Cover: Banking the Unbanked

Banking the Unbanked

CalAccount Market Study and Feasibility Assessment

Published Jul 1, 2024

by Jonathan W. Welburn, Robert Bozick, Maya Buenaventura, David Metz, Vegard M. Nygaard, Patricia K. Tong, Kelsey O'Hollaren, Jessie Coe, Jessie Wang, Lane F. Burgette, et al.


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Annex I: The State of Banking in California

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Annex II: Potential Benefits, Costs, and Impacts of the CalAccount Program

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Annex III: RAND California Survey of Household Finance Methodology

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This report documents an analysis, conducted in response to the California Public Banking Option Act, of the feasibility of the CalAccount Program, which would seek to facilitate basic financial transactions for unbanked and underbanked Californians by providing them with a voluntary, zero-fee, zero-penalty, federally insured transaction account and related payment services.

The authors find that the expected benefits of CalAccount—particularly savings among Californians in marginalized groups gained by avoiding fees associated with banking and the use of alternative financial services—marginally outweigh the expected costs of CalAccount. The authors also find that the CalAccount Program is generally feasible, with two important caveats: Banks may have little incentive to participate in and promote the program, and lack of interest among California's unbanked and underbanked populations may pose a significant challenge to achieving sufficient enrollment in the program. The authors document their findings on program feasibility and the trade-offs between program costs and benefits, and they provide recommendations on implementing the program.

Key Findings

The CalAccount Program has two main potential benefits

  • Annual savings for participants in CalAccount—mainly from avoiding fees associated with banking and the use of alternative financial services—could range from $41 to $101 per household for unbanked Californians and from $131 to $185 per household for underbanked Californians. For low-income households, these savings could have meaningful impacts.
  • CalAccount could significantly reduce disparities in access to banking by race and ethnicity.

The CalAccount Program is feasible, with two important caveats

  • There are no prohibitive concerns that would prevent the CalAccount Program's implementation.
  • However, offering no-fee accounts, at scale, may not be profitable and may not, on its own, provide ample incentive to banks to participate in CalAccount.
  • Enrollment may be one of the largest challenges for CalAccount feasibility, and the largest barrier to enrollment is lack of interest among California's unbanked and underbanked populations.


  • Implement CalAccount with instant payments: Mandating faster check-clearing times, which would provide account holders faster access to their funds, may reduce reliance on check-cashing services.
  • Leverage low-cost options for in-person services, including enrollment: Implementing CalAccount as a mobile banking–only program, without the use of physical locations, is unlikely to garner sufficient uptake for benefits to balance costs.
  • To achieve sufficient enrollment in CalAccount, maximize outreach using community partners, including community organizations, faith-based organizations, and stakeholder groups.
  • Consider an implementation study that would explore challenges for CalAccount enrollment, especially lack of trust in banks and the government; consider how to enlist community partners in maximizing CalAccount enrollment; and provide more details about how the CalAccount Program would be structured.

Research conducted by

This research was sponsored by the California State Treasurer's Office and conducted in the Social and Behavioral Policy Program within RAND Social and Economic Well-Being.

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