Jul 19, 2010 Matt Vitko
A couple of weeks ago I reviewed definitions of the terms "underserved", "underbanked" and the "unbanked". Today I'd like to look at the "underbanked" consumer more closely. The Center for Financial Services Innovation (CFSI) performs research into the underbanked consumer and has provided some unique insights in its reports on the underbanked. CFSI has crafted eight unique underbanked consumer profiles which may help your business realize new opportunities serving the underbanked in designing financial products and services.
"Cash is King": These consumers are most likely to rely on cash for their financial transactions. They are the least likely to have checking or savings accounts.
"The Next Wave": This is a consumer group that is trying their best to cover their needs and they are also hoping to reach financial goals like owning their own home.
"The Strivers": Strivers are a financially aggressive consumer group who take an active role in their money management. More than half of this group may have a checking account. Those that do not are because of concerns like the sharing and security of their personal information.
"Middle of the Road": Middle of the Road consumers are also active financial money managers with nearly 70% currently have a checking account and 60% a savings account. This consumer has these accounts primarily for paying bills.
"My Way": The My Way consumer is more likely than other consumers to have a checking and savings account. This consumer wants transactions done quickly, conveniently, and safely. They don't want any hidden fees or high minimum balances.
"The Savers": Saving money is paramount for this consumer. About half of Savers have a checking and/or savings account.
"Almost There": Consumer of the Almost There group are more likely than others to be part of traditional financial institutions via a checking account - over 60% have them - which they like to have to make bill paying easier and to keep track of their spending. They prefer banks or credit unions that are contained within a store rather than stand alone buildings.
"Borrowers": This group of consumers borrows money frequently and for a variety of reasons... 70% have a checking account and almost 60% have a savings account.
Although most of these eight groups of consumers do some business with their bank or credit union, they represent a huge potential market of "underserved" customers for more financial products and services. By recognizing and acting on the nuances of these distinct and related segments of the low and moderate-income population you can increase your service to and profitability from this sector, both by gaining more business from existing customers and by increasing your new customer acquisition rate. The consumers themselves will benefit if more effective outreach by the mainstream financial services sector gives them access to not only more cost-efficient products and services but additional asset-building opportunities.