The unbanked,
the pre-banked,
and the underserved

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Are we overlooking anyone?

It’s no wonder that to many consumers a bank is a bank is a bank. A regulated banking environment all but disallows substantial differentiation. Setting apart a financial institution in consumer minds is no easy thing. 

For a while, rewards programs presented as a would-be panacea, but these days such seem largely to have morphed into lookalike programs. Moreover, frequency and loyalty are not synonyms. If a compelling rewards program can hold a client, a more compelling one can pull a client away. That’s not loyalty.

Real loyalty is an emotional attachment. One way to foster that kind of attachment is through the personal banker-client relationship. But on that, digital banking is taking an increasing toll. Loyalty also results from longevity, for we humans are creatures of habit. We tend to stick with what’s comfortable and familiar. But, how to create longevity? Rather implicit in the word is that it tends to need a certain length of time to unfold. It relies on landing clients at the outset of their lifetime as a financial services client.

There may exist a new longevity opportunity with the unbanked—a number that Business Insider puts at two billion—and with the underserved.

In many cases, “unbanked” is something of a vicious circle. A good number of the unbanked have little or no money or assets, so it’s not surprising that banks wouldn’t actively pursue them; yet one of the reasons they haven’t much in the way of assets is that they’re unbanked. Business Insider continues:

Financial inclusion has been seen as key for reducing poverty: bank accounts have an important part to play in the founding and expanding of businesses, making transactions more efficient, secure and transparent and managing savings.

Helping the unbanked prosper is a noble goal in its own right. But it may also present a longevity opportunity, that is, a loyalty opportunity with a population historically overlooked by financial institutions. For that matter, “unbanked” doesn’t necessary mean “no money.” A good number of unbanked have plenty of money but simply transact in cash.

Among others, JPMorgan is rising to the call. According to Reuters

JPMorgan Chase & Co on [March 18, 2019] began offering checkless accounts with access to its mobile app, branches and ATMs for $4.95 a month and no minimum balance. The accounts come with debit cards, digital payments and free check cashing, but do not allow overdrafts … Thasunda Duckett, chief executive of Chase Consumer Banking, said she hoped the new accounts will attract more low-income individuals and people who have never had bank accounts.

Another unbanked, or, technically, “pre-banked” population is teenagers. The not unreasonable assumption that teens eventually become adults suggests that an opportunity resides within that population for initiating a relationship and building longevity. Consider the forthcoming app, Step. As reported by Finextra:

The brainchild of Gyft co-founder CJ MacDonald and Square veteran Alexey Kalinichenko, Step is building a mobile-based bank account—held with Evolve Bank—specifically designed for teens that is interest bearing and has no hidden or overdraft fees.

Step has already racked up a waitlist of over one-half million eager teens. Linked to Mastercard, the app “… lets users send and receive money instantly, shop online or in-store as well as use Apple Pay and Google Pay.” Parents are looped in and have oversight.

Step’s timing is interesting, given that JPMorgan just bailed on Finn, similarly targeted to teens. Yet the financial giant hasn’t jettisoned the teen market. Rather, according to Market Insider, the plan is to “focus on attracting millennials through Chase, its primary consumer brand. The existing Finn customers will be transferred to Chase accounts.” Sankar Krishnan of consulting firm Capgemini, as quoted by Forbes, agreed that “… the Chase mobile app has excellent features and functionality and has enjoyed considerable success” and, therefore, “it does not make sense to operate two parallel apps and that could be one reason for ending Finn.”

Meanwhile, Amazon and Synchrony Financial have joined forces on a new, secured Amazon Credit Builder card for people with lower credit scores. Cardholders deposit $100 to $1,000 dollars, which is refundable, and which determines the card limit. Finextra reports, “The card could bring millions of people into Amazon’s orbit. According to a Fico survey, 11 percent of Americans has a credit score below 550.” The unbanked are not an exclusive or possibly not even an intended target, but surely a good many unbanked exist among those millions and may in the end prove grateful and loyal.

Another population that isn’t necessarily unbanked but could use assistance is people with limited use of fingers and hands. To them, touchpad apps are a challenge whereas voice payment technology can be a godsend. I’m not suggesting that Amazon and others at the forefront of voice payment technology have the disabled in mind, however, there are some 30 million in the United States alone who “… have a disability in their hands and/or forearms, including paralyzations, orthopedic impairments, either congenital or injury related.” Again, this is an underserved population that may prove loyal to the first financial services provider that makes life easier for them.

Some services target the traditionally unbanked and underserved, while others not specifically targeting them may reach them incidentally. In an ideal world, the culmination will be an overall rise in prosperity.

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