| $106 billion in fee income and over 106 million people. | | | | cashing is the hamburger, and cash to cash money |
| That is the size of the underbanked market in the | | | | transfers (foreign and domestic), money orders, |
| United States, according to a national survey | | | | prepaid phone cards and bill payment are the |
| conducted by the leading non-profit in the sector, the | | | | equivalent of the French fries, Coke and Apple pie. If |
| Center for Financial Services Innovation. That | | | | all they do with you is cash their check for free and |
| translates into $83 per person every month in missed | | | | walk out the door to spend that money somewhere |
| fee income and who knows how much in potential | | | | else on financial services, then it's a bad proposition |
| loans and deposits. In today's environment of | | | | for both the financial institution and the consumer. |
| tightening credit and hyper-competition for core | | | | Worse, banks and credit unions charge off many of |
| deposits, this seems like an obvious opportunity. So | | | | these checks because they lack effective risk |
| why are so few financial institutions taking advantage | | | | management systems to deal with non-depositor |
| of this market even as bank regulators push | | | | check cashing, even if the check is drawn on their |
| nationally to "bank the unbanked"? | | | | bank. |
| Successfully reaching the underbanked requires more | | | | But there is hope. Offering the combo meal can be |
| than just marketing. To succeed, you have to | | | | done successfully in your branch and it will give the |
| account for all of your key stakeholders. Your board, | | | | underbanked consumer a reason to create a |
| management team, branch staff, and especially your | | | | relationship with you. Once you have their check |
| regulators are going to have questions and concerns. | | | | cashing and other transaction business, then you can |
| Who are these customers, what products do they | | | | start migrating them to a deposit account, and |
| need, what about compliance, what is the impact on | | | | ultimately to credit products. In addition; they will still |
| your branch customer/member experience? | | | | pay you for these transaction services even after |
| Implementing an initiative to bank the underbanked | | | | they become loan and deposit customers. |
| means change for your organization: the products | | | | We have implemented non-bank transaction products |
| you offer, enhancing your compliance program, and | | | | with banks and credit unions in Atlanta, North |
| how you deal with customers in a retail environment. | | | | Carolina, Tennessee, Nebraska, Texas and California. |
| An initiative to serve the underbanked is like a puzzle, | | | | In each case, they have focused on all the pieces of |
| and all the pieces need to fit together to get your | | | | the puzzle to ensure successful execution. For |
| organization, and your regulators, comfortable with | | | | example, check cashing and money transfers result in |
| what you are doing. | | | | large cash transactions that require additional |
| Unlike most of your current customers, the | | | | compliance monitoring. Many Hispanic consumers don't |
| underbanked consumer is focused on "cash" | | | | have U.S. issued IDs, which meant enhancing their CIP |
| transactions that do not involve a bank account. | | | | policy and branch training. The compliance program |
| These consumers may already be in your lobby on | | | | has to work with the product set. Last but not least |
| payday trying to cash their check. They are looking | | | | is marketing, which starts with the customer |
| to acquire part of what we call the non-bank combo | | | | experience in the branch. |
| meal, which makes up that $83 per month. Check | | | | |