Almost 70 million Americans are currently outside, or at least not fully in, the U.S. financial system. Of those Americans, 51 million are underbanked—meaning they supplement their traditional bank accounts with alternative financial services such as payday loans and money orders.
To help community financial institutions (FIs) better connect with the underbanked, a recent Federal Deposit Insurance Corporation (FDIC) report suggests mobile banking apps may be the way to go. The FDIC found 75 percent of underbanked Americans have access to smartphones, making them prime targets for mobile banking options.
Based on its research, the FDIC determined six ways mobile banking helps FIs better meet the financial needs of the underbanked:
- Improves consumers’ access to account information
- Provides quicker access to funds
- Decreases banking costs via improved account management
- Fixes perceived security issues
- Builds knowledge and usage of mobile tools
- Fosters long-term financial management
The FDIC’s report consists of data collected from 18 focus groups including underbanked consumers. Interviews with industry experts and consumer advocacy groups supplemented the research.
Focus group participants further indicated mobile banking options enhance their banking experiences, as they allow for improved control over individual financial behaviors.