“Any small added friction in the payment process can delay customer payment dramatically. This is why we see the underbanked issue as such an important one for our customers. We know that if we are able to offer easy channels of payment for our customers’ customers, we can dramatically affect their payment cycle.” – DivDat
A remarkable 68 million Americans today lack full access to traditional financial services, such as a bank account or credit card, or choose not to use them. The proportion of unbanked households in 2011 increased slightly from 2009. The estimated 0.6 percentage point increase represents an additional 821,000 unbanked households, and experts believe this continues to grow.
Who are the underbanked and what percentage of your customers may be affected?
Key learnings from the Demographic Edition of The FactorTrust Underbanked Index include:
Housing. Underbanked consumers average two years at the same address. Additionally, 66.53 percent of these consumers rent, of these, over 90 percent rent apartments and condos.
Male vs. female. Females make up 62.05 percent of underbanked loan applicants, in comparison to 37.95 percent who are male. Females also account for 60.19 percent of borrowers, compared to 39.81 percent, male. Finally, male’s average loan amount is slightly higher (5.54 percent) than female’s ($559.99 vs. $530.57).
Education. Of underbanked consumers, 33.06% percent have a bachelor’s degree or above. Default rates for those with a bachelor’s degree outperform those with a high school diploma or less by 11.50 percent.
Employment. The average length of employment for underbanked consumers is 2.10 years. The top ten employment sectors consumers are: Retail (24%), Government (17%), Banking/Finance (11%), Benefits/Regular Income (11%), Communications (7%), Medical (7%), Education (7%), Insurance (6%), Retired (5%), and Quick Serve Restaurants (5%).
Income. The average monthly income for underbanked consumers is $3,061.08 ($36,733 annualized).
Marital status. Marital status is insignificant with singles having a default rate of 21.3 percent vs. married 21.1 percent.
The growing segment of Americans depending on cash transactions is driving new and innovative technologies. The opportunity is large – and growing. As highlighted in the annual Underbanked Market Sizing Study, serving the underbanked was a $78 billion market in 2011, with a 9% growth rate projected for 2012.
Are you offering cash-centric, underbanked customers efficient channels of payment? Bill payment kiosks, strategically placed in underbanked regions, are proving to be a user-friendly and marketable solution.
See what DivDat can do.