There are approximately 10 million households in the United States that are unbanked and 24 million that are underbanked. This is according to an FDIC study published on the topic. That’s a large portion of the nation’s population that does not have access to reliable banking services, which impacts their financial security and makes them vulnerable to predatory financial practices. Unfortunately, this challenge of financial inclusion is not a new one, and it results from a raft of economic, social and cultural issues much too complex to explore here. Instead, what I want to explore is the fact that the industry disruption shaping tomorrow’s banking landscape in 2020 creates a perfect storm of opportunity for banks to reach out to the underserved in ways that they have not before.
To sustain their competitive advantage over the next five years, traditional full-service banks will have to revamp operations to become more digital, customer-driven, omni-channel and innovative. Some will evolve to become Everyday Banks, which orchestrate digital ecosystems that provide for customers’ financial and non-financial needs such that they become an indispensable resource for customers’ everyday lives. No matter how far banks go in their digital evolution—and every bank’s journey will be unique—they will make some degree of change that can bridge the divide between the industry and the unbanked and underbanked. Among the most exciting possibilities are:
- Mobile banking that allows people to bank anytime, anywhere if they have a smartphone, which many in this population have.
- Financial apps that bring real-time insights to the purchasing lifecycle.
- A ready connection to trusted partners that this population already has relationships with to provide new and relevant services.
- Discounts and offers that banks share proactively based on data insight.
- Pre-sale, post-sale advice and support and cross-selling opportunities.
It’s about promoting financial inclusion while strengthening banks’ position in an increasingly competitive marketplace—a win-win for all involved.