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To tap the growing number of unbanked and underbanked consumers worldwide, banks need to become more aggressive in offering services and products specifically designed for the market.
The unbanked and underbanked are a growing and increasingly lucrative potential market for financial institutions both globally and in the United States. But banks have to do more than just recognize this is an untapped market; they need to tailor products and services specifically to the unique needs of the customer segment.
Yet in many parts of the world, including Africa, telecommunications companies already have begun to target these groups. While many of these initiatives include financial services partnerships, banks still must be vigilant in protecting their position as the primary trusted service provider as they seek to penetrate the unbanked market. The reward is not just the sale of a single product, but rather an opportunity to turn a consumer with no financial services relationship into a lifelong customer.
According to statistics from the Federal Deposit Insurance Corp., about 25 percent of the U.S. population is unbanked or underbanked. Globally, there are no exact figures, but several estimates suggest that as much as 70 percent of the world's population has limited or no access to financial services.
One common misconception of the unbanked is that they are not tech-savvy, when in fact the opposite is true, says Mary Monahan, EVP and director of mobile research for Pleasanton, Calif.-based Javelin Strategy & Research. According to Monahan, the majority of the unbanked and underbanked own cell phones of some kind, and nearly half are just as likely to own a smartphone as a banked consumer. Monahan adds that they are less likely to own a computer, thus making mobile "a really good way to reach this population."
The underbanked also are frequent users of prepaid cards, Monahan notes, which makes them ideal consumers...