Awhile back we wrote a whitepaper covering the under and unbanked market. At the time, there was little research about this market besides the fact that it was estimated that there were some 70 Million people living outside the credit system. Alternative financial services, such as the prepaid and mobile payments industry are leveraging this market to grow at a rapid pace, while banks still struggle with offering non-traditional services that tap into this market.
Based on the Center for Financial Services Information (CFSI), the amount of underbanked people is about the same as when we wrote our whitepaper, but a lot more information about the market size is now available. This is according to the 2011 Underbanked Market Sizing Study:
United States underbanked financial services are a $78 billion marketplace that encompasses close to two dozen products and services provided to over 68 million consumers.
First let’s clarify what the report means by underbanked:
Underbanked refers to those consumers whose financial needs are not fully served by traditional financial institutions. These consumers use alternative financial services to meet some or all of their financial needs. The “underbanked” designation in this report also applies to consumers who have subprime credit scores, thin or no credit files, or find their access to mainstream financial products challenged by low to moderate household incomes. Collectively, the underbanked represent over $1 trillion in annual income.
There is a lot of data included in the report broken out by the individual market segments mentioned above. And projections based on the first half of the year’s activity show 9% market growth resulting in $85 billion in overall revenue. It’s no wonder the inaugural Money 2020 show sold out with 2500+ attendees.
Seven years ago today I got involved with IDology and it’s been a wild ride. While our identity verification services identify all consumers, we’ve recognized the importance of the underbanked market and the nuances involved in verifying demographics that are more difficult to locate such as new in country or younger demographics. I’m proud of our ability to address the verification needs of the alternative financial services market and am happy to continue serving this market.