To be underbanked is defined as having limited access to mainstream financial services normally offered by retail banks. Many people who are classified as underbanked may also have language barriers, unable to access to banking facilities due to distance such as the elderly people, or simply feel uncomfortable using ATM machines. So how can financial institutions see the underbanked population as an opportunity for growth?
If your credit union services an area with a large population of underbanked consumers, designing product sets geared towards this demographic can increase your member base. One common area for product diversifying to attract and serve the underbanked lies within mobile banking.
According to the Federal Reserve, “mobile phones are prevalent among unbanked and underbanked consumers. The relatively high prevalence of mobile phone and smartphone use among younger generations, minorities, and those with low levels of income—groups that are more likely to be unbanked or underbanked— makes mobile phones a potential platform for expanding financial access and inclusion.”
The report continues: “The share of consumers who would be described as underbanked—defined as having a bank account but also using an alternative financial service such as a money order, check cashing service, pawn shop loan, auto title loan, paycheck advance/deposit advance, or a payday loan—was 14% in 2014. Among the underbanked, 90% have a mobile phone, 73% of which are smartphones.” The opportunity to promote mobile banking to a mobile-savvy demographic cannot be overlooked.
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