Unbanked and underbanked consumers represent the last remaining “white space” in financial services—an uncharted territory where credit unions have a rare opportunity to serve an underserved market.
Approximately 68 million U.S. adults are either unbanked or underbanked. Revenue from serving these unbanked and underbanked consumers totaled $78 billion in 2011 and $85 billion in 2012.
During the past 20 years, an entire industry has emerged to fill the void left by traditional financial institutions. These alternative financial service providers or “fringe bankers” include check-cashing outlets, payday loan stores, and Internet payday lenders.
By charging exorbitant interest rates that can create a cycle of indebtedness, these profiteers act against the best interests of their customers under the veil of providing a helping hand at a time of need.
Credit unions can meet the underserved’s needs by offering appropriate services and building relationships.
A low-income designation, combined with a clear strategic plan, can enhance your ability to enter and serve low- to moderate-income markets. Tools that can help your credit union engage these consumers include check cashing, remittances, and bill pay. The path to asset building starts with a single transaction.
Since CUNA’s compliance staff compiled a list of changes in mortgage interest reporting under the IRS’s Form 1098, several questions have arisen. CUNA’s compliance staff has been able to connect with a coalition of consumer mortgage lenders to provide answers.
Following its groundbreaking comprehensive study on regulatory burden, CUNA released its new Regulatory Burden Calculator that allows individual credit unions to assess the impact of regulation on their operations.
After months of advocacy by CUNA, the CFPB Thursday wrote to CUNA announcing it will initiate a rulemaking this summer to address issues with the bureau’s Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosures rule.