Special Report: Eighth Annual Underbanked Financial Services Forum
Lenders strive to bring underbanked consumers into financial mainstream.
The forum isn't going away, Levy says, but it is undergoing a name change. That’s because “underbanked” is an outdated term that emphasizes products and institutions instead of people.
“Our focus is on the consumer’s need to borrow, spend, save, and plan better,” Levy says.
Alpesh Chokshi, president of global payment options for American Express, holds up a receipt showing that it cost nearly $12 in fees to transfer $80 using traditional services available to the underbanked.
Chokshi explained how American Express partnered with Walmart to establish Bluebird, a prepaid card service backed by a mobile platform that offers an alternative to traditional deposit accounts.
Chokshi says the card is a perfect fit for nonbanked and underbanked consumers, a market where smartphones have an even greater penetration than among the affluent.
Paul Bridgewater (left) says his electronic transactions company, TSYS, purchased the prepaid debit cards provider Netspend earlier this year to “move closer to the consumer.”
He foresees expanding the use of Netspend from an underbanked market into traditional markets as a backup credit card.
Likewise, Netspend CEO Dan Henry says TSYS has relationships with traditional financial institutions that represent partnership opportunities for Netspend.
Kimberly Gartner, CFSI’s senior vice president for advisory services, moderated.
PayPerks co-founders Arlyn Davich and Jake Peters (left) accept a $10,000 grand prize from Core Innovation Capital’s Victoria Cheng and Mike Harris for winning the Core Innovators Mega Challenge. The award, sponsored by Core Innovation Capital, recognizes the nation’s best new financial product or service for the emerging middle class (a.k.a. the underbanked).
Based on audience voting, PayPerks beat out nine other financial-service innovators for the prize.
PayPerks partners with issuers of pre-paid debit cards, including Direct Express, the payment card for federal benefits recipients, to put financial education in front of cardholders. Cardholders earn points by completing Web- and mobile-based education modules that can be used to enter prize sweepstakes.
Using better data allows lenders to safely approve more underserved consumers with thin or no credit histories, says Paul DeSaulniers, director of VantageScore for Experian (at left).
He says using the right tools can help lenders approve 7% more auto loans that otherwise would be declined.
Mike Harris, managing partner with Core Innovation Capital (middle), says subprime auto loans for new cars in 2012 exceeded pre-recession totals.
Neo CEO Navin Bathija says his company helps thin-credit consumers secure auto loans at better rates by analyzing their online banking data. This presents an accurate reflection of their risk to the lender.
Neo bases credit decisions on consumers’ ability to make their loan payments, not on credit score.