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The Unbanked and Underbanked - US - June 2016

"Un- and underbanked Americans are underserved by traditional financial institutions because many don’t have the identification or money to qualify to open accounts. Instead, they are increasingly serviced by alternative financial services companies and are often limited to products that are more restrictive and have higher fees. While some of these consumers will voluntarily remain outside the banking mainstream, many will ultimately decide – and qualify – to enter it. Mainstream institutions need to focus marketing efforts on these customers as they begin to explore their banking options, paying special attention to their technology preferences and working toward dislodging the relationships many already have with alternative companies."
- Robyn Kaiserman, Senior Financial Services Analyst

This report discusses the following key topics:

  • Young people are most likely to be un- and underbanked 
  • Underbanked are not necessarily low income
  • Unbanked consumers believe they don’t need an account 
  • Use of alternative financial products and services

For the purposes of this Report, Mintel has used the following definitions:

  • Unbanked: consumers who have no account at a traditional bank or credit union
  • Underbanked: consumers who have one account at a traditional bank or credit union but who have also used an alternative financial service in the past year
  • Banked: consumers who have an account at a traditional bank or credit union and who have not used alternative forms of credit/service in the past year

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Young people are most likely to be un- and underbanked
            • Figure 1: Share of unbanked, underbanked, and banked, by age, March 2016
          • Underbanked are not necessarily low income
            • Figure 2: Share of unbanked, underbanked, and banked, by household income, March 2016
          • Unbanked consumers believe they don’t need an account
            • Figure 3: Unbanked reasons for not having an account, March 2016
          • Use of alternative financial products and services
            • Figure 4: Use of alternative financial products and services, by banking status, March 2016
          • The opportunities
            • Bitcoins
              • Figure 5: Alternative financial services used, by banked status, March 2016
            • Mobile services are key
              • Figure 6: Importance of online/mobile services, by banked status and demographics, March 2016
            • USPS and postal banking
              • Peer-to-peer lenders may make inroads
                • Figure 7: Use of P2P loan product, by banked status, March 2016
              • What it means
              • The Market – What You Need to Know

                • The underserved market is huge
                  • Aging of America
                    • Growth of Hispanic population
                      • CFPB putting pressure on large banks
                        • NYC ID cards are turned away
                          • Continued growth of online disruptors
                            • Push to allow USPS offer basic banking services
                            • Market Size

                              • The underserved market is big – and getting bigger
                              • Market Factors

                                • Aging of America
                                  • Figure 8: Growth of US population, by age, 2015, 2060
                                • Hispanic population continues to grow
                                  • Figure 9: Growth of US population by Hispanic origin, 2015-60
                              • Market Perspective

                                • CFPB putting pressure on large banks
                                  • NYC ID cards are turned away
                                    • Continued growth of online disruptors
                                      • Push to allow USPS offer basic banking services
                                      • Key Players – What You Need to Know

                                        • Banks are offering accounts targeted to the un- and underbanked
                                          • Mission Asset Fund
                                            • Coin Cloud
                                              • Financial literacy is a problem
                                                • Startups are beginning to focus on underbanked
                                                • What’s Working?

                                                  • Key Bank
                                                    • Spring Bank
                                                      • Fifth Third Bank
                                                        • MAF
                                                          • Coin Cloud
                                                            • Abra
                                                            • What’s Struggling?

                                                              • Financial literacy is a problem
                                                                • Figure 10: Understanding of credit score, by banked status, March 2016
                                                            • What’s Next?

                                                              • Increased financial literacy efforts may help
                                                                • Bank of the West teams up with University of California – Berkeley
                                                                  • Figure 11: Bank of the West print ad, 2015
                                                                • Startups are beginning to focus on underbanked
                                                                  • US Treasury launches mobile app
                                                                  • The Consumer – What You Need to Know

                                                                    • The Unbanked vs the Underbanked
                                                                      • Fees are a major reason unbanked Millennials don’t have an account
                                                                        • Traditional banks and credit unions split new accounts from underbanked
                                                                          • Underbanked consumers are drawn to mobile banking
                                                                            • Consumers trust traditional banks more than online-only banks
                                                                              • Underbanked are concerned about their level of debt
                                                                              • The Unbanked

                                                                                • Who are the unbanked?
                                                                                  • What financial products do they use?
                                                                                    • Figure 12: Financial products owned, unbanked, March 2016
                                                                                  • Use of alternative financial products and services
                                                                                    • Figure 13: Use of alternative financial products and services, unbanked, March 2016
                                                                                  • Opportunity among some unbanked segments
                                                                                    • Figure 14: Use of alternative financial products and services, unbanked, by demographics, March 2016
                                                                                  • Reasons for not having a bank account
                                                                                    • Figure 15: Unbanked reasons for not having a bank account, March 2016
                                                                                  • Fees too high for unbanked Millennials
                                                                                    • Figure 16: Unbanked reasons for not having bank account, by generation, March 2016
                                                                                  • Discover’s free checking
                                                                                    • Figure 17: Discover direct mail ad, 2015
                                                                                • The Underbanked

                                                                                  • Who are the underbanked?
                                                                                    • What financial products do they use?
                                                                                      • Figure 18: Financial products used, underbanked, March 2016
                                                                                    • Use of alternative financial products and services
                                                                                      • Figure 19: Use of alternative financial products and services, underbanked, March 2016
                                                                                    • Underbanked Millennials are an opportunity for online-only banks
                                                                                      • Figure 20: Location of primary account, underbanked, by generation, March 2016
                                                                                    • High income underbanked have researched alternative financial services companies
                                                                                      • Figure 21: Researched alternative financial services companies, underbanked, by household income, March 2016
                                                                                  • Experience with Banks and Bank Accounts

                                                                                    • Opportunities for banks and credit unions
                                                                                      • Figure 22: Plans to open new accounts, by banked status, March 2016
                                                                                    • Mobile banking is important to underbanked
                                                                                      • Figure 23: Financial habits, by banked status, March 2016
                                                                                  • Attitudes toward Banks and Banking

                                                                                    • Traditional banks are in a good spot
                                                                                      • Figure 24: Attitudes toward banks and banking, by banked status, March 2016
                                                                                    • Underbanked men are a challenge for banks
                                                                                      • Figure 25: Attitudes toward banks and banking, underbanked by age and gender, March 2016
                                                                                    • Online and mobile services are crucial to underbanked
                                                                                      • Figure 26: Attitudes toward banks and banking, by banked status, March 2016
                                                                                    • Underbanked are most concerned about their level of debt
                                                                                      • Figure 27: Attitudes toward personal financial situation, by banked status, March 2016
                                                                                    • Key Bank’s focus on money management tools
                                                                                      • Figure 28: Key Bank email ad, 2016
                                                                                    • Millennials are particularly optimistic
                                                                                      • Figure 29: Believe financial situation will improve, Millennials, by banked status, March 2016
                                                                                  • Appendix

                                                                                    • Among underbanked, married men who live in cities are most likely to plan to use traditional banks
                                                                                      • Figure 30: Opening new accounts, by banked status – CHAID analysis March 2016
                                                                                      • Figure 31: Experience with banks and bank accounts – CHAID – Table output, March 2016
                                                                                    • CHAID analysis methodology
                                                                                    • Appendix – Data Sources and Abbreviations

                                                                                      • Data sources
                                                                                        • Consumer survey data
                                                                                          • Direct marketing creative
                                                                                            • Abbreviations
                                                                                              • Terms
                                                                                                • Generations

                                                                                                Companies Covered

                                                                                                To learn more about the companies covered in this report please contact us.

                                                                                                The Unbanked and Underbanked - US - June 2016

                                                                                                US $3,995.00 (Excl.Tax)