Digital alternatives a necessary solution for the underbanked

According to the Federal Reserve, approximately 63 million Americans are either underbanked or unbanked. For the underbanked, specifically, even if they are a customer or credit union member they rarely if ever do business with their chosen institution.

Historically speaking, the definition of the underbanked consumer was a less nuanced, more basic concept. Consumers and members did not have basic deposit or checking accounts within a mainstream financial institution like a credit union. However, the contemporary definition now details those individuals and families who have an account or accounts but rely upon alternative – often financially unstable – services like check-cashing outfits, pre-paid debit cards, or predatory payday lenders.

As PYMTS succinctly put it recently, “The paycheck-to-paycheck economy is changing what it means to be underbanked.”

The facts as they stand right now support that many consumers are not getting what they need from their greater financial institutions, and as a partial result the underbanked population is larger than many institutions realize or understand. That’s because many consumers, in part, are discouraged from opening or accessing their accounts due to real or perceived high fees.

 

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