June 2009

One Billion Opportunities: Banking the Unbanked Globally

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Look and you'll see an exciting landscape emerging in the banking arena. One where there is a billion-strong market actively seeking financial services but remains largely unattended to. These globally distributed prospective customers represent enormous earning potential for banks, but constitute the unbanked.

The unbanked are those who do not utilize banking services and have limited banking needs. The unbanked are not the poorest of the poor. However, they certainly include those whom banks need to serve but cannot do so profitably in the existing banking environment. Though these consumers need access to banking for savings, loans and microfinance, they do not have bank accounts. The reasons for this are compelling.

  • Lack of steady and substantial income leading to a fear of insufficient funds for an account
  • Limited access to banks, especially in remote areas
  • Lack of formal employment that precludes a financial history
    Poor financial literacy
  • Psychological factors such as mistrust of financial institutions

This unbanked billion is not outside the banking sector by choice. An important reason for their predicament is that banks do not offer them suitable products tailored to their needs. In effect, they have been excluded by the banks' inability to understand their requirements and the unwillingness to adopt innovative models to serve them.

However, this billion also constitutes an enormous opportunity

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