An emerging industry of financial services technology startups, known as FinTech, are creating a new wave of products for financially underserved customers. The underbanked market in the United States is currently estimated at $78 billion in annual revenue, serving 68 million consumers across 22 different financial product types. The Center for Financial Services Innovation and Core Innovation Capital co-released Financial Technology Trends in the Underbanked Market on May 7, 2013.
This report examines four key trends in emerging financial technologies impacting the underbanked marketplace today and highlights a selection of noteworthy companies capitalizing on these trends to improve consumer financial health and their own bottom line. The trends include:
This paper has been sponsored by Morgan Stanley and has benefited greatly from the company’s strategic input.
Download Financial Technology Trends in the Underbanked Market below.
Learn more about the 8th Annual Underbanked Financial Services Forum- Fresh Ideas for an Emerging Market here on the conference website.
In 2009, Peter Alvarez of Redstone Federal Credit Union attended his first Underbanked Financial Services Forum, an annual conference held by the Center for Financial Services Innovation (CFSI) and SourceMedia, to learn more about the underserved market. He sat in on a session led by Self-Help Federal Credit Union, in which the credit union discussed its efforts to provide customers with check cashing services. Alvarez, Redstone’s Manager of Emerging Markets, was taken aback. “It blew my mind,” he said. “I was not ready to hear that.” Redstone would never offer check cashing, he thought.
But the idea stuck with him. Alvarez learned even more about the underserved market after Redstone joined CFSI’s Underbanked Solutions Exchange, an industry network for smaller financial institutions looking to develop profitable, high-quality products for the underserved. He soon realized there was no way to serve these consumers without offering check cashing, as well as other products and services that were outside of the credit union’s bailiwick.
The business case of reaching out to underserved consumers was not difficult for the Huntsville, Ala.-based credit union to make. Indeed, FDIC data shows that nearly 193,000 Alabama households lacked a checking or savings account in 2011 and that nearly 40% of all households in the state use non-bank financial services like check cashers. If the credit union focused on how to best reach and serve these consumers, such an effort was likely to result in new member growth, an increase in non-interest income, and a sufficient return on investment.
Download the Impact piece below to learn more.
San Francisco, a hotbed of innovation, aptly served as the backdrop for the 7th Annual Underbanked Financial Services Forum, held June 13-15, 2012. Presented by CFSI and SourceMedia, this year's Forum provided an occasion for nearly 750 bank and credit union executives, technology entrepreneurs, retailers, investors, nonprofit providers, and consumer advocates to discuss the market oportunities in serving the financially underserved and to advance innovative efforts already underway.
Five key themes that emerged from the conference were:
CFSI was also pleased and encouraged by how many attendees at the Forum appeared to embrace the Compass Principles.
Read the full paper below.
On November 1, CFSI released it's second annual Underbanked Market Size study in conjunction with Core Innovation Capital. The new and expanded 2011 Underbanked Market Size report, sponsored by Morgan Stanley, examines the current landscape, growth patterns and key trends driving more than twenty financial products serving underbanked consumers in the United States today. The credit, payment, deposit and other products that comprise the underbanked market collectively generated $78 billion in revenue in 2011, a 7% increase from the previous year.
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The Center for Financial Services Innovation (CFSI) and Core Innovation Capital released their second annual underbanked market sizing brief, which illustrates the range of opportunities for institutions seeking to develop high-quality, affordable financial solutions in the marketplace. The report, which benefits from strategic input and financial support from Morgan Stanley, encompasses 22 financial product types utilized by over 68 million underbanked consumers in the United States.
The new data reveals revenue gained from interest and fees paid by underbanked consumers rose to $78 billion in 2011, a seven percent increase from comparable 2010 data. This revenue was generated from an overall market volume of $682 billion in principal loaned, funds transacted, deposits held, and other financial services rendered.
See the full report below.
