Underbanked

The underbanked is a characteristic describing people or organizations who do not have sufficient access to mainstream financial services and products typically offered by retail banks and thus often deprived of banking services such as credit cards or loans. The underbanked are characterized by a strong reliance on non-traditional forms of finance and micro-finance often associated with disadvantaged and the poor, such as cheque cashers, loan sharks and pawnbrokers.

Many people who are classified as underbanked may also refer to those who have language barrier such as migrant workers, unable to access to banking facilities due to distance such as the elderly people, or simply feel uncomfortable using Automated Teller Machines.

The underbanked are a distinct group from the unbanked, who are characterized by having no banking facilities at all.[1]

Distribution

Small countries have less banking provision than large countries, even allowing for the smaller size of their economies.[2]

Remediation

There are many microfinance initiatives such as the Grameen Bank which aim to improve the provision of banking and financial services to poor communities.

Cryptocurrencies are electronic, non-regulated, decentralized forms of currency are that can be an alternative way to allow the underbanked gain access to their funds without using a financial institution. This includes people either do not have access to regular banking or do not meet conditions for a financial institution. People who have access to technology, but not financial institutions may find cryptocurrencies a viable alternative. This can be done by purchasing the cryptocurrencies from websites or apps using 3rd party systems such as PayPal. People who are underbanked are more likely keep physical cash on hand and have no way to keep their money safe from theft. By utilizing cryptocurrencies, the underbanked will be able to store money, as well as use their funds electronically as a different source of payment.

See also

References

  1. ↑ Retsinas, Nicolas Paul; Belsky, Eric S. (2005). Building assets, building credit: creating wealth in low-income communities. Brookings Institution Press. p. 299. ISBN 978-0-8157-7409-9.
  2. ↑ Hanson, James A.; Honohan, Patrick; Majnoni, Giovanni (2003). Globalization and National Financial Systems. World Bank Publications. p. 91. ISBN 978-0-8213-5208-3.

Further reading

  • "A Report on Financial Exclusion in Australia" (PDF). Chant Link & Associates. November 2004. Retrieved 6 November 2014.
  • Seidman, Ellen; Hababou, Moez; Kramer, Jennifer (September 2005). "Getting to Know Underbanked Consumers: A Financial Services Analysis" (PDF). The Center for Financial Services Innovation. Retrieved 2008-07-22.
  • "The landscape of retail banking in the UK". UK Government. April 2, 2011.


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