Mar 30, 2013 Sean Albert
For many families, it is difficult to imagine what life would be like without access to a traditional financial institution. Banks are important in helping consumers securely store money, pay bills and even build their consumer credit reports. For some Americans, however, taking advantage of these tools is not quite so easy. Unbanked individuals must rely on alternative financial services to get by, and while solutions like ACH cards can be helpful, providers may need to supply them with additional tools for success.
Mobile banking is a big draw
According to Mobile Commerce Daily, a new study from personal finance management firm Quicken discovered that money management problems are a pressing issue for many Americans and that one way they may be trying to get things under control is through mobile banking. The research found that two out of three consumers surveyed get peace of mind from viewing their checking account balance through mobile tools, and 23 percent of respondents said that they would refrain from making a major purchase if they couldn't view their finances from their device immediately. Additionally, more than half of users check their account balances via their smartphones at least once per month.
Not only are more people using mobile banking to feel secure and make smart purchases, they also enjoy using this channel.
"Fifteen percent of those surveyed say they prefer to check their financial accounts on a smartphone or tablet, and that number is only going to grow in the next five to ten years," Barry Saik, vice president and general manager at Quicken, told the source. "The future of finances and financial management is mobile as it allows people to make quick and informed decisions on the go."
How could this work for the unbanked?
While mobile banking is becoming a more popular tool for people using traditional banking services, it may also be able to improve the lives of those who don't have that access. The unbanked and underbanked generally fall into two different categories - those who make too little money to maintain the minimum balance on an account and those who opt not to manage their funds through banks for whatever reason. This can have an impact on their ability to adequately manage their expenses and build credit.
The Federal Reserve notes in its 2012 Survey of Consumers and Mobile Financial Services (SCMFS) that, while mobile phone and smartphone ownership is less common for the unbanked and underbanked compared to the general population, many of them still use the devices. The organization found that approximately three-fifths of unbanked individuals who make less than $25,000 per year still have cellphones, while even more - two-thirds - of people 18 to 29 in this demographic are owners. Because of this, it may be logistically possible for service providers to successfully optimize tools for mobile that target these individuals.
Mobile banking tools, the source noted, may be a way to strike a balance between using more mainstream services and avoiding traditional financial institutions, which is important to many of the unbanked. One important way that this may be able to be accomplished is by enhancing prepaid ACH cards and other reloadable options to work well from a cellphone. Many unbanked people already rely on prepaid technologies to get by. This way, the source noted, it is possible that users can begin to learn stronger money management skills, which will help them in many areas of their lives. For instance, by being able to check their prepaid card balances, they may be able to make more informed purchasing decisions, and alerts systems could help keep them up to date on when they're at risk of running out of funds. This is also useful to retailers, lenders, landlords and more, as families they may not have considered working with in the past may transform into more reliable and empowered consumers.