With a population base of nearly 43 million people, the underbanked offer an immense, untapped consumer segment for federally-insured banks. ‘Wooing the Underbanked’ is a market research study designed specifically to understand the financial needs of the underbanked. The report offers vital market data for banks intending to tap this consumer segment, identifying the most profitable ways to ensure its economic inclusion into the traditional banking cycle.
Browse in-depth TOC on Wooing the underbanked – Need, Behavior and Attitude Analysis market.
The underbanked are educated and employed but are reluctant to use traditional banking products such as debit/ credit cards and short term loans, primarily due to the fear of hidden costs and convenience issues. They make little use of the services provided by the mainstream financial institutions, limiting themselves to traditional banking services such as checking/ savings accounts.
However, the underbanked and the unbanked together spend around $10.4 billion annually on more than 324 million alternate financial services (AFS), such as non-bank money orders, payday lending, check cashing facilities, rent-to-own agreements, and refund anticipation loans. The report analyzes the various reasons for the low adoption of traditional banking products by underbanked and their preference for AFS.
The report identifies the traditional and novel banking and financial services that banks can offer these consumers, indicating prepaid cards as a potential financial vehicle for banks to penetrate the underbanked segment. The prepaid card industry generated $290 billion in 2009. Our research suggests that a significant proportion of the underbanked in the U.S. prefer prepaid cards to checking accounts for basic financial transactions, provided the costs are equal. Prepaid cards can also help the underbanked enhance their credit scores, provided the card-issuer reports regularly to the three main credit bureaus.
Not all underbanked customers afford equal market opportunity. A significant number of consumers have a thin or no credit file, while others have prime and subprime credit scores. Our segmentation of the consumer segment by credit scores and the tendency to use cash as a means of transaction will help banks judge the consumers’ propensity towards different banking products, and thus to formulate successful product development strategies. The report also segments the underbanked on the lines of income, age, education, and region, and race to help banks refine their marketing, distribution, and risk minimization initiatives for the underbanked.
Key Findings from the Report
Scope of the report
MarketsandMarkets (M&M) is a global market research and consulting company based in the U.S. We publish strategically analyzed market research reports and serve as a business intelligence partner to Fortune 500 companies across the world. MarketsandMarkets also provides multi-client reports, company profiles, databases, and custom research services.