At PiP iT we frequently meet with people who find it hard to believe that there are people in the ‘developed’ world that are ‘unbanked’ or ‘underbanked’ but it is a very real situation even in counties with financial systems as developed as the UK or Ireland.
In the UK the Financial Inclusion Commission say there are 1.5m adults with no bank account and Britain is only ranked 9th in the world for Financial Inclusion. Interestingly, on 50% of the unbanked actually want a bank account!
As the blog post below from our Canadian partner company – Payment Source – shows, it is also an issue in Canada. (click here to go direct to the blog)
By Alicja Nowak
We may be living in the 21st century, but according to the Global Findex report, 2 billion adults globally are unbanked. You may think that this number reflects third world countries that do not have the technological capabilities or financial means. However, this number includes developed countries such as the United States, where 28% of the population is either unbanked or underbanked1. In most cases the unbanked are people living in poverty that do not have the funds or education to be part of the banking system. But poverty is not the only reason people refuse to be part of the mainstream banking system.
Below are some reasons people are unbanked:
- Millennials – this generation was born and live in a digital age and prefer to use alternative products such as prepaid cards, money transfers, companies like PayPal2, and solutions like Loadhub. As a millennial I can fully agree with the convenience and ability to budget more effectively without having to ever step into a bank.
- Cost of banking – Many banks add fees that are associated with various transactions such as cashing checks, withdrawing money, overdraft fees, and account maintenance. This can add up to a noticeable sum of money by the end of the year. These extra bills in an already expensive economy can sway people from using these services.
- Privacy – speaking with others about their avoidance of banks brought to my attention that some are weary of these institutions because they prefer to keep their finances private. They do not want the “government” tracking their affairs, and prefer to pay with cash.
- Bad customer experience – most of us had a bad customer experience, in some cases it motivates people to leave the banking system to avoid any more negative experiences.
- Not educated – In some cases people do not understand the banking system and are unaware of their options. This may lead to uncertainty and lack of trust.
- Unavailable services – Many banks like to promote their high end services and accounts with numerous fees that will make them more money. So many do not know about their alternate services with lower fees that they can take advantage of.
- Blacklisted – Many banks decline clients due to their financial history such as records of bounced checks and overdrafts3.
The banking system does not work for everyone for several reasons, so what can we do to reach the unbanked population? Providing an alternate service that is available to everyone, no matter their history or financial situation is the first step. In this digital world, we need a solution that is easy for everyone to use that bridges the gap between digital and cash payments. This is where Loadhub, our award-winning pay in-person solution comes into play. Our solution is a convenient and secure financial solution that makes it easy to load money, make payments, or transfer funds without the use of any bank system