A consumer who is underbanked or underserved means they have limited access to credit, financing, and additional financial services. Often an underbanked and underserved person may end up paying more for similar services or pay fees that otherwise would be free from a bank or credit union. The FDIC reports that approximately 48.9 million adults are underbanked or underserved.
Underbanked: People may have an account with a bank or credit union, but have limited access to mainstream financial services. They rely on alternative financial services from non-banks such as check cashers, money orders, remittances, payday loans, pawnshops, and auto title lenders.
Underserved: People who are underserved may have a primary relationship with a mainstream financial institution but often still have limited access to additional financial services. For example, a personl with a low credit score may be unable to get a loan from a bank or offered any credit products.
Fortunately, many fintechs and traditional banks and credit unions are addressing this population and actively marketing services to them.