Stop The Underbanked Confusion!

An American Banker article titled Reaching the Underbanked? Try Offering Control makes the following claims:

“The 37 million American adults who are underbanked have a tough time when it comes to basic financial activities such as paying bills. But banks don’t have to sit on the sidelines when it comes to the underbanked. There’s an opportunity to service this community through banks. Banks like Regions, Key Bank and Wells Fargo let non-customers come into a branch and receive services and transactions at an affordable price, in a way that’s good for the customer and the bank. [For example], Regions offers Now banking services for customers and non-customers that include check cashing at bank branches, reloadable prepaid cards, money transfers, and walk-in bill payment.”

My take: This represents a misunderstanding of who and what the underbanked are.

In the FDIC’s 2011 National Survey of Unbanked and Underbanked Households, published in September 2012, the two categories of consumers are defined as follows:

“Unbanked households are those that lack any kind of deposit account at an insured depository institution. Underbanked households hold a bank account, but also rely on alternative financial services (AFS) providers.”

Did you see that second sentence? Banks aren’t “on the sidelines when it comes to the underbanked. Underbanked households hold a bank account.

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