Mobile Banking Is an Important Channel for the Unbanked and Underbanked

Mobile banking is increasingly popular in the U.S. consumer market. That’s true not only for traditional bank and credit union customers but also for unbanked and underbanked customers, according to the FDIC’s latest study on unbanked and underbanked households.[1]

The FDIC study found:

  • Relative to fully banked households, underbanked households are more likely to have had access to mobile phones (90.5 percent vs. 86.8 percent) and smartphones (65.5 percent vs 59.0 percent).
  • Smaller, but still significant, proportions of unbanked households had access to mobile phones (68.1 percent) and smartphones (33.1 percent). . . .
  • Among mobile banking users, underbanked households were considerably more likely than the fully banked to use mobile banking as their main banking method (32.4 percent vs. 21.6 percent).[2]

Clearly, financial institutions interested in unbanked and underbanked markets cannot afford to ignore mobile banking. As the FDIC reports:

Mobile banking has the potential to help expand economic inclusion. Mobile technologies provide the anytime, anyplace convenience that is highly valued by underserved consumers….

Mobile technologies might also become useful tools for bringing unbanked households into the financial mainstream. While mobile phone ownership is less common among unbanked households than among the underbanked and fully banked, it is still sizable. Innovations such as mobile account opening could play a role in expanding access to banking for the unbanked.

Financial institutions should invest in easy-to-use solutions for mobile banking and mobile account-opening. “Easy-to-use” is an important requirement on mobile devices, since some of these households have limited or no access to desktop computers and traditional online banking services. Their mobile devices double as their household computers. If a mobile user interface is too cumbersome or slow, users might switch to another institution that offers a more user-friendly and “frictionless” mobile experience.

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To learn about Dragnet Solutions’ real-time account-screening solutions, including real-time ID authentication, identity verification, and account-segmentation, please contact us.


[1] According to the FDIC, an “unbanked” household is a household without any accounts with insured financial institutions. An “underbanked” household has an account with an insured financial institution but has also used Alternative Financial Services such as payday lending or storefront check cashing in the past year.

[2] 2013 FDIC National Survey of Unbanked and Underbanked Households, p. 10

Tags: mobile banking, mobile onboarding, unbanked, underbanked

Posted by John Bennett on 6/12/15 8:02 AM