The unbanked world is bigger than you think

With the explosion of online banking, you'd think that just about everybody has a bank account or utilizes traditional banking services. But as the most recent data available from the Federal Deposit Insurance Corporation shows, over 23 million Americans are underbanked or unbanked, a figure that includes children.

But if you think that number is big, you may be surprised by how many people in the world go without these traditional financial services, a potential consumer market that may present new business opportunities for companies that use alternative credit data in their lending decisions.

More than 28 percent of the world is unbanked
Globally, 2 billion individuals - specifically those who are 18 years of age or older - are unbanked, according to statistics compiled by the World Bank. With a worldwide population of 7.4 billion, this means that nearly 28.5 percent of the world's population doesn't have a checking account, or use other financial services that banks traditionally offer.

Any number in the billions is hard to wrap your head around, but thanks to the speed with which mobile technology is advancing and becoming cheaper to produce, the unbanked world is smaller than it once was. Indeed, in 2011, the total was closer to 2.5 billion, making the 2014 total a drop of 20 percent over three years.

With the approximately 700 million more people worldwide having an account, this means 62 percent of the globe's populace is banked, substantially higher than barely half (51 percent) back in 2011.

Biggest increases in Africa
Some parts of the world have seen access to banks increase faster than others, though on the whole, may be low in comparison to more industrialized nations. The countries with the biggest gains over the three-year stretch were largely in Africa, including Tanzania, Mali, Senegal, Niger and the Democratic Republic of the Congo, according to findings from the World Bank.

However, there are still numerous countries where the banking population is 15 percent or less of the whole. These include Yemen, Iraq, Tajikistan, Chad, Burkina Faso and Egypt. In Turkmenistan - which lies north of Iran and Afghanistan and borders the Caspian Sea - less than 2 percent of the country has a bank account.

What's the best way of reaching these potential customers? According to economists Peter van Oudeheusden and Jan Sonnenchein, perhaps the easiest way is the continued expansion of mobile access. The private sector and governments may also want to provide more vehicles by which people can save their money. Fifty-nine percent of respondents in a 2015 Gallup poll on the world's unbanked cited not having enough money as one of their reasons. 

It's only a matter of time before more people in the world have banking access, and with the surge in fintech companies and internet connectivity over the last decade, it's likely sooner than later. In the meantime, Microbilt can help you grow your book of business through our risk management and credit decisioning tools.