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Emerging Bank Markets - US - March 2009

Since the last survey that Mintel conducted of the unbanked and underbanked markets, two significant developments have taken place: the financial crisis and the election of President Barack Obama. These two events offer both good news and bad news for those looking to market to the underbanked. On the one hand, those distrustful of the banking system are now even more distrustful. On the other hand, as the majority of unbanked and underbanked consumers are immigrants, this poses a possible opportunity.

Due to problems in the banking industry, banking institutions will need to look towards new revenue streams. Though banks are more risk-averse, there is evidence that the underbanked are not necessarily high risk and are actually careful consumers. Given their population growth rates, it is a huge economic opportunity.

This report includes key information about the growing numbers of unbanked and underbanked consumers:

  • What are the demographics of the unbanked and underbanked?
  • What are the factors that lead to distrust and/or underuse of banks?
  • Which segment(s) has the greatest growth rate?
  • What are methods to market to the unbanked and underbanked?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Scope of this report
        • Data sources
          • Consumer survey data
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                  • Industry highlights
                    • Who are the underbanked?
                      • How the unbanked conduct transactions
                        • Marketing to the unbanked
                        • Insights and Opportunities

                            • Uncertainty about the economy
                              • Educational and outreach programs
                                • Distrust of financial service companies
                                  • Services for unbanked consumers
                                    • Accounts to attract the underbanked
                                      • Heterogeneity of the unbanked population
                                        • Assimilation of immigrant populations
                                          • The unbanked and prepaid payroll cards
                                            • Consequences of not having a bank account
                                              • Figure 1: Unbanked and underbanked who have the goal of buying a home, by age, July 2008
                                            • Prime and sub-prime consumers
                                              • Savings on the decline
                                              • Market Size and Forecast

                                                • Key points
                                                  • Interest in bank accounts
                                                  • Competitive Context

                                                      • Help from the non-profit sector
                                                        • Mobile banking
                                                          • Stored value cards
                                                            • Switching to debit cards
                                                              • Wal-Mart
                                                                • Figure 2: Check cashing history, by age, December 2008
                                                              • Product approach
                                                                • Figure 3: How money was sent, for respondents who have sent money in the last twelve months, overall and unbanked, 2006
                                                                • Figure 4: Hispanics who have sent money outside the U.S. in the last 12 months, how sent, by income, January-September 2005
                                                              • Refund anticipation loans and individual development accounts
                                                                • Figure 5: Products offered to underbanked consumers, June 2006
                                                                • Figure 6: Survey of banking executives, ways they are reaching out to the underbanked community, 2007
                                                              • Unique bank programs
                                                                • Alternative service providers
                                                                • Segment Performance

                                                                  • Key points
                                                                    • Demographic groups
                                                                    • Market Drivers

                                                                      • Key points
                                                                        • The increasing number of immigrants
                                                                          • Figure 7: Percentage of immigrant heads of household who have a checking or savings account in the U.S.,
                                                                        • Immigrants by state
                                                                        • Leading Companies

                                                                          • Key points
                                                                            • Figure 8: Proportion of unbanked that have or use a credit card, 2006
                                                                        • Advertising and Promotion

                                                                          • Key points
                                                                              • Figure 9: BoNY Mellon television ad, 2008.
                                                                              • Figure 20: Percentage who have various banking products, by income, December 2008
                                                                            • Financial attitudes and activities
                                                                              • Key points
                                                                                  • Figure 21: Financial attitudes and activities, by gender, December 2008
                                                                                  • Figure 22: Financial attitudes and activities, by age, December 2008
                                                                                  • Figure 23: Financial attitudes and activities, by race/Hispanic origin, December 2008
                                                                                • Trust in financial institutions
                                                                                  • Figure 24: Agreement with statements about trust in financial institutions, by age, December 2008
                                                                                  • Figure 25: Agreement with statements about trust in financial institutions, by race/ethnicity, December 2008
                                                                                • Financial goals
                                                                                  • Figure 26: Financial goals and timeframe, all respondents, December 2008
                                                                                  • Figure 27: Financial goals and timeframe, those that agree that they would like to save for retirement, by race/Hispanic origin, December 2008
                                                                                  • Figure 28: Financial goals and timeframe, start a business, by race December 2008
                                                                                • Prepaid card use
                                                                                  • Figure 29: Percentage who state they prefer prepaid cards for salary, by age, December 2008
                                                                              • Cluster Analysis

                                                                                  • Optimists
                                                                                    • Who they are
                                                                                      • Opportunity
                                                                                        • Cashers
                                                                                          • Who they are
                                                                                            • Opportunity
                                                                                              • Distrusters
                                                                                                • Who they are
                                                                                                  • Opportunity
                                                                                                    • Cluster characteristics
                                                                                                      • Figure 30: Emerging bank clusters, December 2008
                                                                                                      • Figure 31: What type of account(s) do you have at any financial institution, such as a bank, credit union or savings and loan company, by emerging bank clusters, December 2008
                                                                                                      • Figure 32: Please tell us how you feel about financial institutions, by emerging bank clusters, December 2008
                                                                                                      • Figure 33: Have you used a provider other than a bank to cash a check in the last year?, by emerging bank clusters, December 2008
                                                                                                      • Figure 34: Do you regularly receive prepaid cards for your salary or do you buy prepaid cards to make purchases?, by emerging bank clusters, December 2008
                                                                                                      • Figure 35: Would you prefer to receive your salary as a prepaid Visa or MasterCard that you can use to make purchases?, by emerging bank clusters, December 2008
                                                                                                      • Figure 36: What are your financial goals?, by emerging bank clusters, December 2008
                                                                                                      • Figure 37: Thinking about your finances, please tell us whether any of the following statements apply to you, by emerging bank clusters, December 2008
                                                                                                    • Cluster demographics
                                                                                                      • Figure 38: Emerging bank clusters, by gender, December 2008
                                                                                                      • Figure 39: Emerging bank clusters, by age group, December 2008
                                                                                                      • Figure 40: Emerging bank clusters, by income group, December 2008
                                                                                                      • Figure 41: Emerging bank clusters, by employment status, December 2008
                                                                                                    • Cluster methodology
                                                                                                    • Appendix: Other Useful Consumer Tables

                                                                                                        • Figure 42: Experience with banking, by gender, December 2008
                                                                                                        • Figure 43: Experience with banking, by employment status, December 2008
                                                                                                        • Figure 44: Experience with banking, by region, December 2008
                                                                                                        • Figure 45: Financial outlook, by region, December 2008
                                                                                                        • Figure 46: Financial outlook, by income, December 2008
                                                                                                        • Figure 47: Financial outlook, by employment status, December 2008
                                                                                                        • Figure 48: Prepaid card usage, by age, December 2008
                                                                                                        • Figure 49: Prepaid card use, by income, December 2008
                                                                                                        • Figure 50: Percentage of prepaid card use, by employment status, December 2008
                                                                                                        • Figure 51: Preference for prepaid cards, by age, December 2008
                                                                                                        • Figure 52: Preference for prepaid cards, by race, December 2008
                                                                                                        • Figure 53: Preference for prepaid cards, by income, December 2008
                                                                                                    • Appendix: Trade Associations

                                                                                                      Companies Covered

                                                                                                      • Ace Cash Express, Inc.
                                                                                                      • American Express Company (The)
                                                                                                      • Artisans Savings Bank
                                                                                                      • Association of Hispanic Advertising Agencies
                                                                                                      • Association of Latino Professionals in Finance and Accounting
                                                                                                      • BancorpSouth, Inc.
                                                                                                      • Bank of America Corporation
                                                                                                      • Bank of New York Mellon Corporation, The
                                                                                                      • Citibank
                                                                                                      • Cohn & Wolfe
                                                                                                      • Consumer Credit Counselling Service
                                                                                                      • Federal Deposit Insurance Corporation
                                                                                                      • Federal Reserve System
                                                                                                      • Fifth Third Bancorp
                                                                                                      • First Data Corporation
                                                                                                      • Greenfield Online
                                                                                                      • H&R Block, Inc.
                                                                                                      • Hispanic Marketing and Communication Association (HMCA)
                                                                                                      • International Association of Hispanic Insurance Professionals (IAHIP)
                                                                                                      • International Bank of Commerce
                                                                                                      • JPMorgan Chase & Co
                                                                                                      • KeyBank Real Estate Capital
                                                                                                      • Latin American Agents Association
                                                                                                      • MasterCard Incorporated
                                                                                                      • Mercator (International)
                                                                                                      • MoneyGram Payment Systems, Inc.
                                                                                                      • Monroe Bank
                                                                                                      • National Association of Hispanic Real Estate Professionals
                                                                                                      • Orlandi Valuta
                                                                                                      • Ridgewood Savings Bank
                                                                                                      • ShoreBank Corporation
                                                                                                      • U.S. Bureau of Labor Statistics
                                                                                                      • U.S. Bureau of the Census
                                                                                                      • Vigo Remittance Corp
                                                                                                      • Visa U.S.A. Inc.
                                                                                                      • Walmart Stores (USA)
                                                                                                      • Wells Fargo & Company
                                                                                                      • Western Union Holdings, Inc

                                                                                                      Emerging Bank Markets - US - March 2009

                                                                                                      £3,277.28 (Excl.Tax)