Will Unbanked Outnumber Banked Consumers? Solutions in the Race to Win Share in Underserved Markets

Published by: TowerGroup

Published: Jul. 21, 2008 - 10 Pages

Table of Contents

Report Coverage

Background

Defining the Underbanked and Credit Underserved Markets

Who Is Serving the Unbanked and Credit Underserved Markets?

How Banks Can Compete for the Underserved Market

The Microfinance Market

Examples of FSIs' Programs for the Underbanked

Summary

Abstract

TowerGroup Take-Aways

• An estimated 100 million adults in the United States — almost one-third of the population — are considered to be in the unbanked, underbanked, and credit underserved markets.
• Consumers in the underserved market are fluid but often with the goal of becoming mainstream Americans by, for example, becoming home owners.
• Several segments of credit underserved consumers exist and warrant examination and attention by financial institutions.
• Some consumers choose to be unbanked or underbanked because they have had negative experiences with financial institutions, and they are turning to other organizations, which are profiting from providing services to them.
• Traditional financial services institutions (FSIs) need to create the right products for financially underserved consumers because their existing products do not meet their needs or win market share.

Report Coverage

More than 100 million individuals in the United States today are considered unbanked, underbanked, or credit underserved. These consumers heavily rely on alternative, nonbank providers of financial services to conduct their financial transactions. This TowerGroup Research Note defines and examines the market segments they represent. It also provides information that financial services institutions (FSIs) can use to develop a means to profitably serve the individuals who purchase their financial services from nonbank providers.

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