Market Trends: Opportunities In the "Unbanked" Consumer Market

Published: July 1, 2005 - 156 Pages

Table of Contents

  • Who Are the Unbanked?
    • A Demographic Portrait of the Unbanked
      • In-Depth Study
      • Cost, Minimum Balances Chief Factors Against Having an Account
      • We Don't Take Checks
      • Roughly One-Quarter Are `Unbanked'
      • Income, Education and Household Size Key Factors
        • Table Income: Banked vs. Unbanked
        • Table Highest Education Level: Banked vs. Unbanked
        • Table Race/Ethnicity: Banked vs. Unbanked
        • Table Children: Banked vs. Unbanked
        • Table Age: Banked vs. Unbanked
    • Behind the Correlations
      • Income and Cost
        • Table Reasons for Not Having a Checking Account
        • Table Reasons for Not Having a Savings Account
      • Don't Like Dealing With Banks'
        • Table Reasons for Not Having a Checking Account: "Hard" and "Soft" Barriers
      • Bad Credit Has an Impact
        • Table Reasons for Not Having a Savings Account: "Hard" and "Soft" Barriers
      • Cultural, Language Issues Less Significant
      • Location Not An Issue, Although Convenience Is
        • Table Reasons for Not Having a Checking Account: Convenience and Location
        • Table Reasons for Not Having a Savings Account: Convenience and Location
      • Complexity and Motivation
        • Table Reasons for Not Having a Checking Account: Complexity and Motivation
        • Table Reasons for Not Having a Savings Account: Motivation and Complexity
      • Consumer Knowledge and Sophistication
      • Unbanked Consumers May Overestimate Barriers
      • Unbanked May Choose to Be That Way
        • Table Reasons for Cashing Checks at Banks and CCOs
        • Table Why Do You Prefer Cashing Checks at a CCO Rather Than Bank?
      • Checks May Not Be Widely Accepted
        • Table How Do You Pay Your Rent?
        • Table How Do You Pay Your Rent?
        • Table Why Do You Buy A Money Order (If you have a checking account)?
        • Table Of the friends and family members closest to you, how many do you think have checking accounts?
      • Many Unbanked Formerly Banked
        • Table If Unbanked: Have You Ever Had:
        • Table If Yes: Why Did You Close Your Most Recent Bank Account?
      • Unbanked Consumers Still Have Relationships with Banks
      • Ties to "Fringe" Financial Sector
        • Table Use of Fringe and Mainstream Financial Institutions by Banked and Unbanked Households
      • Opportunities for Banks in the Low-Middle Income Marketplace
      • Banks Seeking to Expand in LMI Market Face Challenge
    • Financial Demographics by Race: Focus on Hispanics
      • Total Buying Power Statistics
      • Buying Power Statistics by Race
        • Table U.S. Buying Power by Race: 1990, 2000, 2003, 2008 ($ billions)
        • Table Percentage Change in Buying Power by Race: 1990-2003, 1990-2008, 2000-2003, and 2003- 2008
        • Table Market Share of Buying Power by Race: 1990, 2000, 2003, 2008 (%)
      • African American Buying Power
      • Hispanic Buying Power
        • Table Hispanic Buying Power: 1990, 2000, 2003, and 2008 ($billions)
        • Table Percentage Change in Hispanic Buying Power: 1990-2003, 1990-2008, 2000-2003, and 2003- 2008 ($billions)
        • Table Market Share of Hispanic Buying Power: 1990, 2000, 2003, and 2008 (%)
        • Table U.S. Population Statistics by Race: Population: 1990, 2000, 2003, 2008
        • Table Percentage Change in U.S. Population: 1990-2003, 1990-2008, 2000-2003, and 2003-2008
        • Table Share of Population by Race: 1990, 2000, 2003, 2008 (%)
        • Table Hispanic Population: 1990, 2000, 2003, and 2008
        • Table Percentage Change in Population: Hispanic vs. Non-Hispanic 1990-2003, 1990-2008, 2000-2003, and 2003-2008
        • Table Share of Hispanic Population (%)
        • Table 2003 Top Hispanic Consumer Markets by State ($billions)
        • Table % Change in Hispanic Buying Power by State: 1990 - 2003 ($billions)
        • Table 2003 Hispanic Share of Total Buying Power by State (%)
  • The Check Cashing and PayDay Lending Industry
    • Industry Overview
      • Additional Benefits of Check Cashing and Payday Lending
      • Size of the Market
      • Role of Trade Associations
      • Community Financial Services Association of America
      • Best Practices
    • Association and Company Customer Demographic Profiles
      • FiSCA Customer Demographics
      • Ace Cash Express Customer Demographics
      • Dollar Financial Check Cashing Customer Demographics
      • Dollar Financial U.S. Payday Loan Customer Demographics
        • Table Advance America Customer Demographics (1)
      • Check Cashing
      • Some Choose Check Cashers Over Traditional Banks
        • Table Types of Financial Services Obtained from Currency Exchanges: Unbanked Consumers, by Race/Ethnicity1
        • Table Types of Financial Services Obtained from Currency Exchanges: Banked Consumers, by Race/Ethnicity1
      • Not Everyone Wants a Checking Account
        • Table Reasons for Not Having a Checking Account1
      • Payday Lending
      • Payday Lending Taking the Heat
      • Debt Trap Problem
      • Check Cashing and Payday Loan Players
    • Ace Cash Express, Inc.
      • Table Ace Cash Express: Revenue by Service Offering: 2002-2004
      • Check Cashing
      • Payday Loans
      • Bill Payments
      • Prepaid Debit
      • Money Transfers
      • Money Orders
      • Self-Service Machines
      • Other Services
        • Table Ace Cash Express: Operating and Check Cashing Data: 2000-2004
    • Dollar Financial Group, Inc.
      • United States Operations
      • Check Cashing
        • Table Dollar Financial: Check Cashing Revenue: 2000-2004
      • Payday Lending
      • Other Services and Products
    • Advance America, Cash Advance Centers, Inc.
      • Table Advance America Data Metrics: 2003 - 2004
      • Table Advance America Revenue by Segment: 2002-2004*
    • Check Into Cash, Inc
    • Cash America International Inc.
      • Cash Advance Activities
        • Table Cash America International Cash Advance Data: 2002-2004
      • Check Cashing Activities
        • Table Cash America International Revenue: 2002-2004
      • EZCORP
      • Payday Loans
        • Table EZCORP Revenues by Segment: % Increase: 2002-2004
        • Table EZCORP Revenue by Segment: 2002-2004
    • First Cash Financial Services Inc
      • Table First Cash Financial Services Revenue: 2002-2004
  • The Latin America-United States Remittance Market
    • A Huge and Growing Market
      • 45% of Latin American Remittances Go to Mexico
      • Remittance Transmission Frequency Increases as Costs Decrease
      • Latin American Remittance Senders Five Times More Likely to be Unbanked
      • Remittance Study Findings
      • Cost of Remittances Decrease as Volume Rises
      • Increased Competition Fuels New Remittance Product Offerings
      • Banks and Credit Unions Do Not Offer Significant Price Advantage
      • Bank Share of Remittance Market Lags
      • Marketing Campaigns Show Signs of Success
      • Immigrant Banking Products Increase
      • Transfer Mechanisms
        • Table Remittance Mechanisms: Share of Transfer U.S. to Latin American and the Caribbean
      • Competition: Mature, Consolidating, and Underdeveloped Markets
      • No Mature Markets in Latin America Exist Yet
        • Table Remittances to Mexico: Volume and Costs
      • Mexico: A Consolidating $14 Billion Market
      • Who Controls the Mexican Remittance Market?
      • Other Consolidating Markets
      • Underdeveloped Markets
      • Transaction Costs and Changes over Time
      • Banks and Remittances
        • Table U.S. Immigrant Remittance Senders with Bank Accounts by Country of Origin
      • Banks and Credit Unions and the Remittance Transfer Industry
        • Table Type of Institution Offering Remittances (%)
        • Table Percent of Banks Offering Remittance-Related Services
        • Table Charges Made by Banks and Credit Unions to Transfer Remittances to Mexico (by method used)
      • Offering More than One Remittance Product Provides Competitive Advantage
        • Table Available Types of Transfer Operations
    • U.S. Remittance Industry Players
      • First Data Corporation
      • Payment Services
        • Table First Data Consumer-to-Consumer and Consumer-to-Business Revenue: % of Payment Services Revenue: 2002-2004
      • Western Union Consumer-to-Consumer Business
      • Consumer-to-Consumer
        • Table Western Union Consumer-to-Consumer Money Transfer Growth: 2002-2004
      • Consumer-to-Consumer?International
        • Table Western Union International Consumer-to-Consumer Money Transfer Business: 2002-2004
      • Consumer-to-consumer?Domestic (including Canada)
        • Table Western Union Domestic Consumer-to-Consumer Money Transfer Business: 2002-2004
      • Consumer-to-Consumer?Mexico (Western Union and Orlandi Valuta services)
        • Table Mexico: Western Union and Orlandi Valuta Consumer-to-Consumer Money Transfer Business: 2002-2004
      • Vigo Acquisition
    • MoneyGram International Inc.
      • Global Funds Transfer Segment
      • MoneyGram Money Transfers
      • Money Orders
      • Bill Payment Services
      • PrePaid Debit Option
        • Table Money Gram Segment Information: 2002-2004 (Dollars in thousands)
        • Table MoneyGram Global Funds Transfer Segment
    • Global Payments Inc.
      • Table Global Payments Revenue: 2003 to 2004 Quarterly Comparison
      • Money Transfer Offering
      • Consumer-To-Consumer Money Transfer
        • Table Global Payments Revenue: 2002-2004
  • Unbanked Products and Services Trends
    • The Private Sector is Listening
      • Product Strategy Advice for the Hispanic Market
      • A Realistic Approach
      • Start Slowly
    • Unbanked Product and Services Trends
      • ATM and Direct Deposit
      • ATMs Penetrate Rural Unbanked Areas
      • Cross Border ATM Use
      • ATM Cash Acceptance Option
      • Direct Deposit
    • Card-Based Programs
      • Stored Value Cards
      • The "Checkless Checking Account": A Case Study
      • An Early Experiment: Reporting of "Accounts in Good Standing"
      • A Savings Vehicle Marketed as Overdraft Protection
      • Payroll Cards
      • U.S. Bank offers the Visa AccelaPay card
      • Key Bank Checkless Account
      • Card-Based Remittance Options
    • Remittance Offerings Proliferate
      • Remittance Services Offered by Banks
      • Harris Bank
      • BB&T
      • U.S. Bank Begins Offering MoneyGram Transfers
      • Wells Fargo Expands Wire-Transfer Outlets
      • Bank of America Eliminates Remittance Fees Tied to Checking Accounts
      • Bank Remittance Marketing Tools
      • Banks Still Having Difficulty Penetrating Market
    • Remittance Services Offered by Credit Unions
      • Vigo Remittance Services
      • Credit Union Remittance Marketing Tools
    • Unique Account Offerings
      • Citibank "Checking Plus"
      • Special Savings Accounts
      • Individual Development Accounts
      • Frost Bank and the City of San Antonio IDA
      • Fee Waivers
      • Free Tax Counseling Services
      • Initial Deposits
      • Bundled Services from Wells Fargo
    • ITIN and Matricula Consular Identification Acceptance
    • New Check Casher and Payday Lender Products
      • Payday Lender Savings Accounts
      • Prepaid Debit Options Proliferate
      • Internet Options
    • Retail Sector Enters Unbanked Space
      • Safeway Begins Cashing Tax Refund Checks
      • Wal-Mart Expands Capabilities to Reach Unbanked
      • Wal-Mart and Certegy Expand Check-Cashing Deal
      • MoneyGram Extends Pact with Wal-Mart.
      • More Retail Check Cashing to Come
      • Green Dot Retail Prepaid Debit Catches On
      • New Payday Debit Option: Purpose Advantage Card
      • Retail Kiosks
      • 7-Eleven is Kiosk Happy
      • CashWorks Payroll Cashing Partnership Formed in 2004
      • H&R Block to Provide Refund Anticipation Check Cashing Kiosks at 7- Elevens
      • Cashworks Provides Its Own Payroll Cashing Kiosks
      • Fastrip Cashes In
      • eFunds "Get Checking" Education/Account Combination
      • How It Works
    • Other Trends
      • Leapfrogging to Wireless Technology
      • Credit Reports That Reflect Unbanked Activity
    • Financial Education for the Unbanked
      • Financial Education Can Foster Positive Changes in Financial Behavior
      • Financial Education Initiatives
      • The FDIC's Money Smart Program
  • Recent Regulations and Pending Legislation Affecting the Unbanked
    • Patriot Act Section 326 and the Matricula Consular ID Card
      • Attempt to Limit Matricula Card Use Defeated
      • Revised FDIC Payday Lending Guidance
      • Highlights of the FDIC Guidance
    • Pending Federal Legislation Affecting the Unbanked Market
      • H.R. 200, the Prevention of Predatory Lending Through Education Act
      • H.R. 773, the 21st Century Access to Banking Act
      • H.R. 1295, the Responsible Lending Act
      • H.R. 200, the Prevention of Predatory Lending Through Education Act
      • H.R. 1643
      • H.R. 1660
    • State Payday Lending Legislation: 2003-2005
      • Table 2003 Enacted Payday Lending Legislation
      • Table 2004 Enacted Payday Lending Legislation
      • Table 2005 Enacted Payday Lending Legislation

Abstract

Over the past few years, the financial services industry has made major moves to bring the unbanked consumer into the mainstream, as check cashers, payday lenders, and banks vie for a piece of the newly competitive 10 million household unbanked market. As the interests of the financial services industry and low-income consumers converge, driven by technological advances, government policy, the expansion of the alternative financial sector and major demographic shifts, more and more of the unbanked are using new products, such as card-based “checkless” accounts, retail kiosks and remittance programs.

Market Trends: Opportunities in the Unbanked Market, the newest report from Packaged Facts, offers the most up-to-date demographic information available on the unbanked consumer—particularly on race and buying power—with a focus on Hispanic unbanked consumer. We also break down the market to view the check cashing, payday lending, and remittances markets (and market players) individually.

Our report also provides unbanked product and services trends for banks, credit unions, check cashers and payday lenders, and retailers, including stored value card programs, unique checking and savings accounts, and ancillary services—as well as marketing tools for banks and credit unions.

Report Methodology
The information in Opportunities in the Unbanked Market is based on both primary and secondary research. Primary research involved interviews with marketing, public relations and industry analysts within the banking market and consultants to the industry. Market size data was derived from Information Resources, Inc. Secondary research entailed data-gathering from relevant trade, business, and government sources, including company literature.

What You’ll Get in this Report
Opportunities in the Unbanked Market makes important predictions and recommendations regarding the future of this market, and pinpoints ways current and prospective players can capitalize on current trends and spearhead new ones. No other market research report provides both the comprehensive analysis and extensive data that Opportunities in the Unbanked Market offers.

Plus, you’ll benefit from extensive data, presented in easy-to-read and practical charts, tables and graphs.

How You Will Benefit from this Report
If your company is already doing business in the unbanked market, or is considering making the leap, you will find this report invaluable, as it provides a comprehensive package of information and insight not offered in any other single source. You will gain a thorough understanding of the current market for un- and under-banked consumers, as well as projected markets and trends through 2009.

This report will help:

  • Marketing Managers identify market opportunities and develop targeted promotion plans for unbanked consumers.
  • Research and development professionals stay on top of competitor initiatives and explore demand for nontraditional banking instruments.
  • Advertising agencies working with clients in the banking industry understand the product buyer to develop messages and images that compel consumers to use their services.
  • Business development executives understand the dynamics of the market and identify possible partnerships.
  • Information and research center librarians provide market researchers, brand and product managers and other colleagues with the vital information they need to do their jobs more effectively.


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