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FDIC: Percentage of US Unbanked Households Decreasing
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KBurger
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KBurger,
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10/30/2014 | 4:40:58 PM
Re: Surprising?
I definitely feel like there are market opportunities for banks to better serve the unbanked/underbanked market. Maybe most banks feel like they've got what they want right now -- they're generating a lot of fee revenue. But it seems to me that with a different approach -- different kinds of products, priced differently, it's not so much about making money off fees but building a relationship, educating people about finances, enable them to build financial strength and then upsell them -- could pay off better in the long term. That's probably an oversimplified view,  but the current approach doesn't seem sustainable, not to mention fair to those consumers.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/30/2014 | 3:14:43 PM
Re: Surprising?
I had some issues with overdraft fees when I was a college student. It's an extremely frustrating thing to get hit with. I can't say I really blame people getting hit with those for thinking that they are getting screwed over by the banking system. Prepaid cards though would probably be a better alternative for banks looking to attract those customers. Prepaid cards are a much cheaper product to offer, and the custoemr doesn't have to worry about overdraft fees.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/30/2014 | 3:11:36 PM
Re: Surprising?
ApplePay has been marketed so far as though it's more geared towards credit cards. The merchant-backed mobile wallet MCX actually connects straight to a bank account. That way the merchants avoid paying interchange. But Greg's definitely right in saying that most of the alternatives out there still require a bank account.
KBurger
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KBurger,
User Rank: Author
10/30/2014 | 1:12:51 PM
Re: Surprising?
There's an interesting editorial in the NY Times today about the FDIC study, a professor who studies unbanked consumers and why they are unbanked. She spoke with people who use check cashing services and in many cases even tho the fees/rates of such services can be very high, based on the ways many of these consumers manage their financial needs it still works better for them than dealing with a bank. These consumers are getting slammed by bank minimum checking fees, overdraft fees, etc. Seems like with the non-bank services they feel more like "you get what you pay for" compared to dealing with banks.
Greg MacSweeney
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Greg MacSweeney,
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10/30/2014 | 11:26:05 AM
Re: Surprising?
Even with Apple Pay, PayPal, Venmo and almost all the other payment options, you really do need a bank account to access all of the functions. You can use a card with PayPal, but if you ever want withdraw money from PayPal, you need a bank account. And as jon says, you still need a bank account for most employers.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/30/2014 | 10:04:35 AM
Re: Surprising?
I think that those newer payments players are part of the reason that there's still so many underbanked. Having a bank account is historically tied very closely to gainging employment. Receiving direct deposits was one of the biggest reasons for having a bank account in the study. And by far the biggest reason reported in the study for recently becoming unbanked was loss of a job. So as unemployment goes down, so will the unbanked population. But that does preclude those people from moving into the underbanked category, and using alternative financial tools in addition to a bank account.
KBurger
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KBurger,
User Rank: Author
10/29/2014 | 12:57:28 PM
Surprising?
I actually am surprised to see that the % of unbanked households in the US is decreasing. With everything we're hearing and writing about regarding emerging untraditional competition and consumer interest in handling financial services activity with non-banks, I would have expected the numbers, or at least the trend, to be somewhat different. I don't think this means the threat to banks is easing, it's more that we're still seeing the trend play out. Give Apple Pay more time to gain traction, then I think the numbers will be more dramatic.


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