Tuesday, January 11, 2011

Have you considered unbanking the Banked?

"There's a troubling trend in this nation: People are giving up their banks." starts an article that I read recently (Read here). During 2008 the Center for Financial Services Innovation, estimated that about 13% of US households are either unbanked or underbanked. This is a large number, but what is even more interesting (worrying?) is that that this number has now grown to 25%. This is a massive shift. The article then try and fathom the reasons for this phenomena.

I would like to postulate that these customers do not want the services offered by banks (and quite frankly), banks do not want these customers as customers. They typically do not buy the services offered by the existing banks and are probably not very profitable to service. It is this disconnect between (lets call them) classic banks and lower income customers that are driving this trend. It is my view that given an alternative banking experience this trend will become a flood. If these consumers were to be able to satisfy their banking needs in a more friendly, geographically distributed way, the 25% will grow to 50%.

Here-in lies the opportunity - even in the US - to build an alternative service that will unbank the banked onto a more suitable service. This service will undoubtedly have to be based on the mobile platform.


Dean Bubley said...

The problem is that very few people, especially in low-income groups, want longterm, enduring relationships with individual mobile operators.

Although the operators see banking as a way to minimise churn, the fact remains that cellular phone users often *want* to churn.

Lock-in is not the same as loyalty.

The only way that mobile banking will take hold in a major fashion (in competitive mobile markets) will be if the bank accounts are decoupled from telecom access contracts or prepay subscriptions.

Either that, or governments will need to force operators to enact "bank account portability".

Luhein said...

The trick is to be bank- and network agnostic. Then you will not experience churn.