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Strategies for Banking the Unbanked: A Global Market Opportunity

By: Ray Cain
Published: August 2007

Strategies for Banking the Unbanked

The unbanked market is estimated at over two billion people worldwide. In the US alone, it is believed that unbanked and under-banked people, plus unregistered immigrants, receive almost US$1 trillion in annual income.

This comprehensive report provides up-to-date commentary, data and insights enabling new and established players to reach this huge untapped market.



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With examples of best practice, detailed country surveys and market projections it answers the following questions:

  • What is the size and commercial potential of the market?
  • What are the most effective forms of marketing, distribution and credit scoring?
  • Once banked how best to retain customers? What are the opportunities for cross-selling additional banking services?
  • What are the compliance issues surrounding the unbanked market?
  • What are the best strategies for success? How do these differ from traditional strategies? How do these vary from country to country?
  • What are the opportunities and strategies for partnering with non-financial institutions to deliver financial services to the unbanked?

To purchase this report, or to request a report summary or list of case studies, call Jeannie on +44 (0) 207 563 5640 or email

While banks have historically viewed this market as risky and unprofitable, the commercial success of the informal financial sector and tremendous growth of the microfinance movement have forced them to reconsider. Given the intense competition in today’s retail banking market, acquiring new customers is viewed as easier than attempting to poach existing customers from other banks. Furthermore, studies indicate that the recently banked are a far easier group to cross-sell additional products and services to than long-term existing customers.

Unsurprisingly, many banks now view the market as a strategic imperative and are developing innovative strategies in product design, distribution, marketing, customer relations, and credit risk management to meet its unique needs.

Major market segments include low-income consumers, immigrants, ethnic minorities, and rural communities. However, there is considerable diversity within these groups and careful segmentation is required. A careful and detailed understanding of the customer is needed.

Grassroots marketing is more effective than traditional marketing in reaching the unbanked. It typically involves participation in community events, networking with community leaders, and partnering with community-based organisations.

A familiar, welcoming, branch environment is essential to attracting the unbanked. In many markets providing services in the customer’s native language is an important first step. Decorating the branch according to the themes of the target culture is also common. Ideally, banks should hire staff directly from the communities they serve.

Banks are placing branches in more locations likely to be frequented by the unbanked, such as stores, schools, community centres, and workplaces. Portable and mobile branches allow them to test new locations and serve areas where the cost of a traditional branch is not justified. They are also partnering with third-party distributors such as retail outlets, postal networks, cheque-cashers, microfinance institutions, workplaces, and community organisations.

Direct technological channels are constantly lowering costs and expanding outreach. Satellite-linked ATMs and smart cards are used in rural areas. High mobile phone penetration among unbanked consumers is driving the spread of mobile telephone banking in a number of markets. The Internet is a less effective channel at present, because of lower penetration and the relatively high cost of personal computers (PCs), although recent developments in PC design and retailing may see this change.

Banks should mitigate the risk of lending to low-income or new borrowers by using a number of measures including affordable repayment schedules, alternative credit scoring models, diversification and group lending, small trial-run loans, savings-backed loans, guarantees from governments, charitable organisations, or employers, and financial education.

Many products for the unbanked are ‘gateway products’ – designed to attract customers into the bank so they can be persuaded, over time, to invest in more profitable offerings. Common products include basic accounts, remittances, cheque-cashing, bill payments, prepaid cards including payroll and benefit cards, payday loans, microcredit, and consumer finance. Gateway products are often lower-priced versions of products already accessed by the unbanked through informal financial services providers.

With detailed case studies from the UK, the US, Russia, India, Mexico and Brazil this report provides a timely introduction to tackling the largest untapped retail banking market in the world.

Chapter 1: Introduction

Chapter 2: Strategies and Best Practices

Chapter 3: The United Kingdom

Chapter 4: The United States

Chapter 5: Australia

Chapter 6: South Africa

Chapter 7: India

Chapter 8: Russia

Chapter 9: Brazil

Chapter 10: Mexico

Chapter 11: Conclusion

View full Summary Report

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