New tools drive unbanked, underbanked participation

The unbanked and underbanked populations in the United States and abroad continue to increase, largely the result of increased economic turbulence and a distrust in traditional financial institutions. However, as these households represent a major potential source of revenue for many different businesses, organizations are seeking new methods of reaching these adults.

Electronic payments, especially mobile transactions and prepaid cards, have been the most popular alternative financial services among the unbanked and underbanked populations. Businesses can use such products and initiatives to reach new clients who fall into the unbanked population, and drive revenue in the process.

Mobile devices big with underbanked households
American Banker recently reported that mobile technologies are helping alternative financial services providers, businesses and financial institutions penetrate the difficult unbanked and underbanked markets. Recent estimates suggest that more than half of all phone users in the United States are now carrying smartphones, and the number of consumers involved in finance-related activities through these devices is growing as a result.

According to the news provider, mobile initiatives give underbanked and underbanked individuals the convenience they desire from their financial services, and these strategies are generally more affordable and efficient than more traditional customer service methods. Emerging markets tend to be the most ripe for mobile and other electronic-based payment services, and successful companies have cultivated comprehensive strategies to capitalize on these trends.

The source explained that mobile payments and other financial services can break down barriers standing in the way of higher revenues in emerging markets. 

"Mobile transcends demographics," Andrea O'Connor, customer experience executive of a major financial institution, told American Banker. "Mobile is about behavior. It's about accessing information and transacting business yourself at any time, wherever you are, whatever your age."

More companies are entering the mobile financial services game, illustrating the need for businesses to proactively approach this trend for the highest revenues.

The impending cashless society
Early adopters of electronic payments technology will have an advantage over competitors who are slower to adopt the tools, as implementation and marketing of these capabilities will strengthen loyalty with new consumers in various demographics. Prepaid cards continue to be the electronic payment of choice for some of the biggest populations, including the unbanked and young adult categories.

Businesses should consider creating prepaid card strategies that directly target these demographics, as it will help acclimate to the increasingly cashless society.