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.
The new mortgage servicing rule from the CFPB clarifies the frequency of required written early intervention notices. A mortgage servicer must provide notice to a delinquent borrower no later than the 45th day of the borrower’s delinquency.
It is imperative that Congress take action to eliminate the negative consequences of last year’s changes to the Telephone Consumer Protection Act, CUNA wrote to a House subcommittee conducting a TCPA hearing Thursday.
CUNA Chief Advocacy Officer Ryan Donovan discusses this week's congressional activities, as well as advocacy strategies for the CFPB's short-term, small-dollar loan proposal in this week's Advocacy Update video.