As we move to an increasingly digital world, banking is following suit. However, what does that mean for the 14.1% of Americans that are underbanked? In this article, we’ll discuss some of the challenges of being underbanked in a digital-first society, along with how banks and financial institutions can help bridge the gap between physical and digital banking to create more integrated, accessible financial services.
Why are People Underbanked?
Not all Americans choose to use a bank or credit union as their primary method for financial services, but there are several reasons why a household or individual may be underbanked. According to the FDIC, they may be unable to meet the minimum balance requirements to open a bank account, or they simply may not have a bank or financial institution close to where they live.
Another reason that some individuals remain underbanked is that they both lead a cash-preferred lifestyle and also lack time for banking. For example, workers who make most of their income in cash tips might elect to simply transact in cash rather than spend the extra time it takes to deposit their income into a bank account. If these individuals also live in a banking desert, handling financial tasks may require them to travel or take time away from work, leading to a smaller paycheck and larger transportation costs. The inconvenience of working inside the traditional banking system presents a roadblock to this population that can prevent them from accessing financial services such as savings accounts, CDs, and other financial products that can help them build financial reserves.
Blending Physical and Digital Banking
With these challenges in mind, financial institutions can fill the gap in the market by making banking more accessible for underbanked households. So how can your institution tap into this opportunity to both serve underbanked individuals and drive growth? Here are three ways your organization can make banking easier:
- Encourage new bank accounts
Some organizations have started encouraging underbanked customers to open basic, low-cost bank accounts when they enroll in direct payment government benefit programs. By doing so, they have found that providing more account options drives underbanked customers to open new accounts with their institution.
- Offer lower ATM fees
According to data from Mercator Advisory Group’s recent report on the current U.S. banking environment, only 25% of customers are willing to pay for the convenience of having an ATM when and where they want it. Additionally, their survey found that access to ATMs and account fees are the most significant factors for customers when selecting a bank. Some organizations have discovered that by lowering or entirely waiving ATM fees, they drive more customers back into their branches instead of into competing institutions.
- Retail Remote Deposit
Coinstar for Financial’s newest program, Retail Remote Deposit, allows your customers to deposit coins directly into their checking account from any participating Coinstar kiosk. With a convenient option to deposit coins, it’s easier for cash-preferred customers to participate in digital banking and use new accounts for bill pay, kids’ savings, or any other purpose. Retail Remote Deposit makes it easier for cash-preferred customers to access your bank or credit union’s services, which creates a better customer experience that is likely to build their loyalty to your institution.
Entering the Age of Integrated, Accessible Banking
The key to providing accessible banking for all populations is bridging the gap between physical and digital banking. By providing more ways for underbanked customers to transact with you, not only do you help customers access the financial services they need, but you drive financial results for your institution through increased accounts, increased deposits, and customer loyalty. Learn more about how Retail Remote Deposit fuels growth for your institution, and follow Coinstar for Financial on LinkedIn for up-to-date financial insights.