How Mobile Banking can Benefit the Unbanked

The “unbanked and underbanked” are terms that are being batted about in the boardrooms of financial institutions around the world. Gradually, executives have woken up to the fact that there are billions of potential customers who are not using their services. In America alone, there are nearly 90 million Americans who are unbanked or underbanked. This represents an enormous growth opportunity not only for financial institutions, but more importantly, for individuals that use mobile banking solutions.

chart Why are people unbanked and underbanked? Generally speaking, those who are unbanked and underbanked tend to be living on a limited budget, working class and financially less knowledgable. Some have been blacklisted by financial institutions due to past mistakes, while others have been denied accounts because of their age or income levels. Others opt out of the traditional banking system in order to avoid excessive fees. Still others feel the bank’s products and pricing don’t meet their needs. There are a myriad of reasons that people don’t have bank accounts, and not all of them are by choice.

Mobile banking can make banking services more convenient and lower cost.  Makes sense since people can do things directly from their phones and the cost is lower for the bank to provide these services.  Javelin Strategy and Research  reports the cost to a bank for in-branch deposit is $4.25, but only 10 cents if the deposit is made via mobile check capture. The average bank annual cost sayings per customer can be $50. This is a huge savings and can contribute to lower fees for the customer (of course, the bank needs to pass on the savings with different pricing).

In fact, by the end of this year, it’s estimated that nearly 45 million Americans will be using mobile banking services to complete transactions ranging from check depositing to bill payments.

So, how can we continue to increase this number to include the unbanked and underbanked? First, financial institutions need to extend their outreach efforts within lower income communities to make potential clients aware of the mobile banking services available. Second, people within communities across the country need to be educated in how to access and utilize mobile banking services to their advantage.

In the end, there are a vast number of people who could benefit from incorporating mobile banking services into their lives as they reach for their specific goals and dreams. Thus, it’s well worth the efforts being put forth by Walmart, American Express, Mastercard and others who are currently leading the way in this regard.

Like myself, they recognize that mobile banking has the potential to improve the U.S. economy and give it a more solid, stable and inclusive foundation. That’s something we all benefit from, and it’s something we should all be working to facilitate.

Image Source: Javelin Strategy and Research 

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About Carol Realini

Serial Entrepreneur, Mobile Payments and Banking Pioneer, Author, Board Member Carol Realini is a successful Silicon Valley executive and expert in financial service innovation. She has worked with leading financial institutions including MasterCard and Citi, as well as numerous multinational and regional banks, to change the way banking is conducted. In 2011, as a Technology Pioneer attending the World Economic Forum, she led discussions on alternative banking at their meeting in Davos. A serial entrepreneur, she has been recognized as one of the 50 Top Women in Technology by Corporate Board Member magazine. Carol is a huge believer in the potential of mobile banking and payments to create financial inclusion - where everyone with a mobile phone has access to affordable financial services that empower their life and work. To understand Carol's vision please watch the WEF video (click on the weforum.org link below). Carol also mentors entrepreneurs providing wisdom and lessons learned from her four successful startup experiences.
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