Bank Technology News writesthat mobile financial services delivered through smartphones and prepaid cardsare the best ways to draw people into the financial mainstream.
Both the CFSI and FDIC researchsuggests that mobile phones and prepaid cards present opportunities for banksto reach these potential customers. Underbanked households are more likely touse smartphones than bank branches, computers or telephones to access money andaccounts — and they’re much more likely to do so than even fully bankedhouseholds.
While these can be valuable channels for reaching peoplewithout traditional bank accounts, they cannot be seen as panaceas for theissues faced by unbanked and underbanked people. It is worth noting thatresearch by the Pew Charitable trusts should that less than half of U.S.citizens age 30-49 making less than $30,000 a year said they owned smartphonesin 2013 (http://www.pewinternet.org/2013/06/05/smartphone-ownership-2013/).
It is also worth noting that these tools can give people away to lower the transaction and day-to-day financial management costs, butthey do not necessarily help people build credit scores or wealth. It isimportant to supply opportunities to graduate to better products and supply newtools for building better financial lives along with alternatives to high costfinancial services. Otherwise the risk is that these people remain in apermanent economic underclass.
Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group
Read full story at American Banker
