Six Steps To Capture Financially Underserved Consumers
We often think of checking and savings accounts as commonplace, but in reality over a quarter of the U.S. population doesn’t have either one. This translates into 67 million individuals being financially underserved in America. These consumers are referred to as “underserved” because they’re not fully leveraging traditional financial offerings of a bank.
Understanding the Underserved
The underserved segment is made up of unbanked and underbanked consumers. Unbanked consumers don’t have a checking or savings account. Underbanked consumers have a checking and/or savings account, and have used alternative financial services* in the past 12 months.
Hispanics and African Americans are the most likely to be underserved. Additionally, underserved consumers are more likely to have incomes that vary month-to-month. They also tend to be younger, and are often parents of children under 18.
*Alternative financial services include check cashing institutions, money order providers outside of a bank, payday lenders, pawn shops, rent-to-own services, auto title loaners, and tax anticipation loaners.
Two Types Emerge
We uncovered two different types of underserved consumers in our research:
Locked Out – unable to access traditional financial institutions. They’re considered to be Locked Out if any of the following are true:
- Applied for the same financial product multiple times and rejected each time
- Very low income, less than $10K single or less than $20K with children
- By own admission, rarely have any money to save
By Choice – enjoy flexibility of accessing both traditional and alternative financial institutions. They have multiple banking and financial options, and use them based on their needs and preferences.
Reaching the Financially Underserved
Below are six actions that companies can take to reach the financially underserved. Some of these will resonate with all consumers (integrated, Total Market efforts), while others are geared specifically to the underserved (dedicated efforts) as noted in the legend:
Guidance for Financial Services Companies
- Message to status, but also to aspirations – Regardless of status, most consumers share aspirations for long-term financial stability. The underserved are likely to respond well to messages around helping their day-to-day finances, as well as those focused on long-term preparation and security.
- Invest in Brand Awareness – Most consumers have a particular brand in mind when doing general financial searches online. It’s imperative for your company to be top of mind so that your website is the first one they visit. Invest in brand awareness efforts to increase the chances for them to search and purchase your products.
- Invest in customer-service/satisfaction training for employees – The underserved place particular value on service. They’re also very likely to transact in-person. Positive in-person interactions help you retain them so make sure your staff is trained to provide the best possible customer experience.
Guidance for Non-Financial Companies
- Make it easy to pay cash – Underserved prefer to pay in cash, especially for transactions that are less than $30. Prepare your staff to receive cash and train them to complete quick, correct cash transactions.
- If offering store-specific credit, focus on convenience and mobile access – If your business offers a credit card or in-store financing, make sure the product is easy to use. Optimize for customer use. Many use mobile phones when searching for financial topics, so provide a user-friendly mobile alternative that allows them to learn about and manage the product on their devices.
- Don’t make Spanish your top priority, but consider it if targeting less acculturated Hispanics – Hispanics tend to trust complex information (e.g., banking and medical) in English more than Spanish, especially when searching online. If you offer complex services, Spanish should not be your top priority. However, if you’re targeting less acculturated consumers, make sure to offer bilingual information and customer service.
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