Strategies for Banking the Unbanked: A Global Market Opportunity
VRL Financial News Publishing, August 2007
The worldwide unbanked market is estimated to be in excess of 2 billion people. This comprehensive report provides up-to-date commentary, data and insights enabling new and established players to reach this huge untapped market.
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?
Who should read this report?
CEOs, heads of retail banking/consumer finance, strategic planners, marketing managers, emerging markets specialists, consultants, sales managers.
…in:
Commercial banks
Non-bank financial services companies (i.e. consumer finance companies, money transfer agents, credit card companies, credit unions, CDFIs etc)
Non-FI (potential) distributors of financial services including retailers, supermarkets, post offices, telecoms etc.
Consultants/suppliers –payment solutions, research, marketing etc.
What are they looking for?
To understand opportunities in the unbanked market, the structure and demographics of the market, the policy environment, and strategies for success, particularly with respect to cooperation with financial institutions.
To understand a new market and identify potential clients.
About the Author:
Ray Cain is a freelance researcher who specialises in banking and finance. He holds a Post-Graduate Diploma in Banking and a Master of Management in Banking from Massey University in New Zealand. He is also studying for a PhD in Economics at the University of Fribourg in Switzerland. During his working career, he has held management and consulting roles in economic development projects in Indonesia and Serbia.
EXECUTIVE SUMMARY
INTRODUCTION
- Product strategies
- Distribution strategies
- Marketing and customer relations strategies
- Credit risk strategies.
INTRODUCTION
- Who are the unbanked.
- Market size
- Formal vs. informal financial institutions
- Why are people unbanked?
- Drivers of change
- The business case for banking the unbanked
- Strategies and best practices
- Product strategies
- Designing products for the unbanked
- Gateway products
- Basic accounts
- Cheque cashing
- Bill payments
- Stored value cards
- Banca Posta
- Payroll cards
- ABN AMRO – United Arab Emirates
- Electronic welfare distribution
- Remittance products
- Cash-to-cash model
- Cash-to-card model
- Cash-to-account model
- Account-to-card model
- Account-to-account model
- Account-to-cash model
- Western Union International Bank
- Credit products
- Distribution strategies
- Branch channels
- Branches in non-traditional locations
- Portable branches
- Mobile branches
- Shared branching
- Technology channels
- ATMs and self-service kiosks
- Smart cards
- Mobile telephone banking
- M-banking in the Philippines
- Internet
- Third-party distribution channels
- Retailers
- Franchisees
- Postal networks
- Other financial institutions
- Microfinance Institutions
- Community-based organisations
- Workplace
- Home Street Bank – Employer Assisted Housing
- Marketing and customer relationship strategies
- Market segmentation
- Gathering market information
- Customer relations
- Institution-wide commitment
- Financial education
- Simple and transparent product information
- Marketing channels
- Grassroots marketing
- FONKOZE – Haiti
- Bank of India
- Mainstream media
- Cross-selling
- Credit risk strategies
- Managing repayments
- Diversification
- Alternative credit scores
- Relationship lending
- Group lending
- Building a credit history
- Financial education
- Collateral and guarantees
- Alternative proof of income
- United Kingdom.
- UK Post
- Supermarket banks
- ATM Access
- Partnerships between banks and non-profits
- Prepaid cards.
- Savings programmes
- Access to affordable credit
- Lloyds TSB and South Coast Money Line
- Access to financial education and money advice
- FSA’s Financial Capability Steering Group
- Royal Bank of Scotland – Face to Face with Finance
- Case Study – Barclays Bank
USA
- Number and profile of the unbanked population
- Financial services used by the unbanked
- Reasons for financial exclusion
- Initiatives to bank the unbanked
- Basic accounts
- Electronic Transfer Accounts
- Citibank Access Account
- Individual Development Accounts
- Community development initiatives
- Community Reinvestment Act
- CDFI Fund.
- Banking development districts
- Financial education
- Government policy and programmes
- Banks’ programmes
- Key Bank – Partnership with non-profit
- Banking on Our Future – Financial education in schools
- Arvest Bank – Financial education in the workplace
- One Economy – Using the internet
- Wells Fargo – Online gaming
- Targeting the Hispanic population
- Bilingual service
- Community outreach
- Creating a familiar branch environment
- Recognising the market’s unique cultural characteristics.
- Market segmentation.
- Accepting alternative ID.
- Case study – El Banco De Nuestra Comunidad
- Gateway products in the US market
- Remittances
- Directo a Mexico
- Wells Fargo – InterCuenta Express Account
- Cheque cashing
- Bethex Federal Credit Union – Banking services in cheque cashing outlets
- SSA Baltimore Federal Credit Union – Banking and cheque cashing in a common location
- Union Bank of California – Special cheque cashing branches
- Key Bank – Cheque cashing in the bank branch
- Payday loans
- Northside Community Federal Credit Union – Payday Alternative Loan
- Second Chance Accounts
- Get Checking.
- Stored value cards
- NetSpend
- First Community Financial
- Directo Inc
- Trycera Financial prepaid MasterCard
- Home loans
- Distribution channels in the US market
- In-store branches
- Wal-Mart
- Workplace branches
- Branches in schools
- Mitchell Bank
- Mobile branches
- Peoples Federal Credit Union
- First Security Bank
- Self-service kiosks
- Citigroup branded kiosks in 7-Eleven stores
- Shared branching in credit unions.
- Partnerships between banks and community based organisations
- Commerce Bank of Washington and the Compass Center
- First Charter Bank’s partnerships with churches
- En Su Casa – Mortgage banks and the National Council of La Raza
- Citibank and Boat People SOS
- Partnerships between financial institutions and municipal governments
- H&R Block – Everyday Financial Services programme
- Affinity programmes
- Center for Community Change
- Minotaur Group.
- AARP
Australia
- Numbers and characteristics of unbanked population
- Reasons for financial exclusion
- Financial services used by the unbanked
- Financial services needs of the financially excluded
- Initiatives to bank the unbanked
- Government policies and programmes
- Financial literacy initiatives
- Extending access to rural areas.
- Rural Transaction Centres
- giroPOST.
- Bank@Post
- Working with indigenous communities
- Banks’ initiatives to bank the unbanked
- NAB’s Concession Card Account
- Westpac’s agency branches
- Bendigo Bank’s Community banks
- NAB’s affordable loan programmes
- CBA’s financial literacy initiatives.
- Case Study – ANZ Bank.
South Africa
- Number and characteristics of the unbanked population
- Financial services used by the unbanked population
- Reasons for financial exclusion
- Initiatives to bank the unbanked
- Financial Sector Charter 2003
- Mzansi Account
- Non-branch distribution channels
- ABSA Bank
- Standard Bank
- First National Bank
- Nedbank
- Mobile Banking
- First National Bank
- MTN Banking
- Case Study – Wizzit Bank
- Standard Bank
- Citigroup
- Visa International
- Nedbank
- New banking framework – Dedicated and Cooperative Banks Bills
India
- Mobile branches
- Andhra Bank
- Doorstep banking
- Third party intermediaries
- Yes Bank
- India Post
- Basic accounts
- Access to credit
- Priority sector targets
- Strengthening rural banks and urban cooperative banks
- Supporting microfinance
- Rural credit cards
- General credit card
- Simplified settlement of loans
- Financial education
- Case study – ICICI Bank
Russia
- Number and characteristics of unbanked population
- Reasons for financial exclusion
- Initiatives to bank the unbanked
- Government policies
- Deposit insurance
- Other retail banking legislation
- Bank initiatives
- New distribution channels
- One-stop shop – Alfa Bank
- Agency agreement with postal service – MDM
- Bank and Bank of Moscow
- Mail order credit – Rusfinance
- Consumer finance
- Payroll cards
- Raiffeisenbank
- Citibank
- Vozrodzhenie Bank
- Financial education
- MasterCard
- Housing Finance Bank
Brazil
- Number and characteristics of unbanked population
- Reasons for financial exclusion
- Initiatives to bank the unbanked
- Correspondent Banking
- Basic accounts
- Caixa Economica Federal
- Banco Popular do Brasil
- Lemon Bank
- Banco Postal
- Access to credit
- Microfinance
- Consumer finance
- Electronic welfare payments
Mexico
- BANSEFI and L@Red de la Gente
- The Rural Microfinance Technical Assistance Project (PATMIR)
- Directo a México
- L@Red de la Gente
- Caja Popular Mexicana
- Mexico’s retailer banks.
- Banco Azteca
- Case Study – Banamex
- ANZ Bank
- Bendigo Bank
- Caixa Economica Federal
- Banco Popular do Brasil
- Lemon Bank
- Andhra Bank
- ICICI Bank
- Yes Bank
- Banamex
- Banco Azteca
- Alfa Bank
- Bank of Moscow,
- MDM Bank
- Raffeisenbank
- ABSA Bank
- First National Bank
- NedBank
- Standard Bank
- Wizzit Bank
- Barclays
- Lloyds-TSB
- Royal Bank of Scotland
- Key Bank
- Wells Fargo
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