CandleFocus Glossary Editor
In the US, unbanked adults are those who lack access to traditional financial services such as having a checking account or using credit and debit cards. This makes it difficult for people to save money, keep it safe and make payments without having to use cash. For low and middle-income Americans in particular, the lack of access to such services can lead to economic hardship and even poverty.
The reasons for not using banking products vary, but some of the most commonly cited reasons are lacking the funds to open and maintain an account, lack of trust in the banking system, poor understanding of bank services, lack of access due to proximity or lack of documentation or identification, and privacy concerns.
Low and Middle-Income (LMI) populations are the most highly impacted by the issue of unbanked adults. As of 2013, 28 percent of LMI households were unbanked, compared with just 8 percent of high-income households.
The issue of unbanked adults is particularly important because they are often faced with higher fees, poorer customer service and fewer options than those with access to traditional financial services. For example, unbanked individuals may not be able to forgo using check-cashing services that can charge exorbitant fees.
Governments and other organizations have initiated several programs to “bank” the unbanked, such as the FDIC's Money Smart program. Money Smart provides information and skill-building activities to help people manage their finances more effectively and to become financial activists in their communities.
In an effort to bridge the gap between traditional banking services and the unbanked population, new innovative fintech solutions have sprung up. Mobile wallets and payment applications offer a cashless option for those without bank accounts, and cryptocurrencies provide an alternative to traditional currencies.
With all the technological advancements, it is clear that the unbanked population can still use secure, safe and easy financial products. By offering creative solutions, the unbanked population can not only reap the benefits of a secure financial life, they can also become movers and shakers in the global economy.
The reasons for not using banking products vary, but some of the most commonly cited reasons are lacking the funds to open and maintain an account, lack of trust in the banking system, poor understanding of bank services, lack of access due to proximity or lack of documentation or identification, and privacy concerns.
Low and Middle-Income (LMI) populations are the most highly impacted by the issue of unbanked adults. As of 2013, 28 percent of LMI households were unbanked, compared with just 8 percent of high-income households.
The issue of unbanked adults is particularly important because they are often faced with higher fees, poorer customer service and fewer options than those with access to traditional financial services. For example, unbanked individuals may not be able to forgo using check-cashing services that can charge exorbitant fees.
Governments and other organizations have initiated several programs to “bank” the unbanked, such as the FDIC's Money Smart program. Money Smart provides information and skill-building activities to help people manage their finances more effectively and to become financial activists in their communities.
In an effort to bridge the gap between traditional banking services and the unbanked population, new innovative fintech solutions have sprung up. Mobile wallets and payment applications offer a cashless option for those without bank accounts, and cryptocurrencies provide an alternative to traditional currencies.
With all the technological advancements, it is clear that the unbanked population can still use secure, safe and easy financial products. By offering creative solutions, the unbanked population can not only reap the benefits of a secure financial life, they can also become movers and shakers in the global economy.