March 08, 2011

When you imagine what the underbanked population looks like, do you think of cash-poor citizens of a third world country or middle-class college grads in the United States?

That question is the basic premise of a video produced by Bank 2.0 author Brett King on opportunities that exist in the underbanked space.

A few details from the video (embedded above) include:

  • The current underbanked population in the United States is 40-60 million, half of which have college degrees
  • Prepaid debit cards will be a $200 billion industry in the U.S. by the end of this year
  • The average prepaid customer is 27 and sees no reason to choose a traditional bank account when the transactional flexibility of a prepaid debit card is on par with that of a debit card offered through a traditional bank
  • Smartphone banking transactions amount to that of about 40 bank branches
  • So what does it mean? One answer is that many Americans are choosing to go unbanked and are replacing the services a bank would offer with prepaid debit cards and cash. With mobility on the rise, and new technology such as Near Field Communications starting to get baked into smartphones, it could present an opportunity to serve this new type of customer and shift the perception that banks are all about branches.

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