Racing to serve the unbanked could have huge payoffs
Credit unions and small community banks are facing competition in one of the most unexpected banking spaces – the unbanked.
Forbes.com just released a report about startup companies racing to deliver basic financial services to the 1.7 billion people on the planet who don’t have a bank account at all. Companies like Tala are loaning as little as $20 a month to people in countries like Mexico and the Philippines, where the unbanked exceed 60% of the population. Borrowers pay 15% interest and use that money to start their own businesses. As they become more profitable, Tala increases the amount they may borrow.
How long do you think it will take for this race to hit American soil?
Companies like Green Dot have already tapped into the U.S. unbanked market with cash cards for consumers who have bad credit or can’t afford bank fees. Cash cards are similar to debit cards except they are not tied to a checking account.
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