Tapping the Unbanked Market

Wireless carriers, money-transfer vendors, and other stakeholders are poised to bring mobile banking services to North America's unbanked.

This is Part 2 of a two-part series exploring the opportunity to service the large unbanked and underbanked population in North America through innovative new banking services. Part 1discussed the need for “mobile wallets” in North America, and how they could benefit lower-income communities in the same region. Part 2 takes a closer look at the stakeholders that are poised to offer mobile banking services.

Post economic downturn, there is a healthy demand for prepaid cash services in the United States. In 2012, $118.5 billion will be loaded onto prepaid cards, accounting for 650 per cent growth since 2009. Establishing a light mobile wallet will grow this existing market and add valuable services to the U.S. economy, helping members of the lower-income, cash-dependent community build and protect their wealth while avoiding fees associated with traditional banking services.

According to a Federal Reserve Bank publication from 2010, “Unbanked consumers spend approximately 2.5 to 3 percent of a government benefits check and between 4 percent and 5 percent of payroll check just to cash them.” Clearly, there is a need for services that would reduce this “poverty tax” on unbanked consumers. But what solutions are currently on the table, and which players in the value chain are motivated to champion mobile-cash services?