Mar 11, 2013 Sean Albert
The unbanked represent a largely untapped market of consumers looking for safe ways to obtain access to services they may be cut off from otherwise. Without debit cards, the unbanked are limited in the ways they can obtain goods. According to a recent Financial Times blog, providers of ACH cards and mobile banking solutions are leading the way in solving some of this underserved population's difficulties.
In a guest column, tech expert Sanjay Poonen noted that mobile banking methods, in addition to ACH cards, tend to gain success quickly when introduced to unbanked populations. When Dutch Bangla-Bank Unlimited (DBBL) released their mobile banking option, the service gained more than 1 million subscribers in only 10 months, Poonen noted. But DBBL is not alone. Safaricom launched a similar product in 2007 that targeted the underbanked population in Africa and found themselves with nearly 15 million users by March 2012.
According to 2012 data from the World Bank, there are at least 2.5 billion people worldwide who qualify as unbanked. While some of these individuals opt out of traditional methods of funds management, about 75 percent of this population live in poverty, which contributes to the condition. Two-thirds of adults worldwide cited the lack of money as a reason for not using a bank. In cases like these, individuals may not have enough funds available at any time to maintain the minimum balance on a traditional account.
One of the reasons these payment methods work among the impoverished is that cellphones, which are often required to take advantage of the full range of mobile banking tools, have become a necessity in modern society. They are considered a both a safety tool and a useful method of maintaining relationships with friends and family, according to Discovery Tech. Now, with more alternative banking methods going mobile, smartphones can also function as money management devices.
Technology like ACH cards may also be useful to this population in widening their options. These cards can help individuals develop a line of credit, which is necessary for many modern purchases, such as a car or a home. According to Poonen, these cards may even help users develop a better grasp of financial management overall, a skill that they can use in many contexts, including if they later move to traditional banking systems. In this sense, options like mobile banking and ACH cards are important because they help level the playing field for the poor.