A new report from Aite Group, LLC debunks 10 myths commonly held by bank executives, regulators and consumer advocates about unbanked and underbanked consumers. The analysis is based on a 400-person survey with consumers at check-cashing stores, completed in November and December of 2008.
Among the myths debunked by the report is the belief that consumers are unbanked or underbanked because of cultural and attitudinal reasons. Instead, it reveals that people are unbanked for very practical reasons, including credit, pricing, cash flow and service issues. Fifty-three percent of unbanked consumers in Aite Group’s survey are impeded by credit issues, while an additional 28% face pricing issues with checking accounts, 12% are impeded by cash flow issues, and 7% constrained by service issues.
“Consumers that are underbanked and unbanked often choose to be so for practical reasons rather than attitudinal ones,” says Gwenn Bzard, research director with Aite Group and co-author of this report. “Greater education and marketing wizardry is unlikely to succeed in attracting this group to checking account relationships. The only way for banks to seriously compete is to deliver a better product and value proposition.”
D.C.