In 2009, Peter Alvarez of Redstone Federal Credit Union attended his first Underbanked Financial Services Forum, an annual conference held by the Financial Health Network and SourceMedia, to learn more about the underserved market. He sat in on a session led by Self-Help Federal Credit Union, in which the credit union discussed its efforts to provide customers with check cashing services. Alvarez, Redstone’s Manager of Emerging Markets, was taken aback. “It blew my mind,” he said. “I was not ready to hear that.” Redstone would never offer check cashing, he thought.

But the idea stuck with him. Alvarez learned even more about the underserved market after Redstone joined the Financial Health Network’s Underbanked Solutions Exchange, an industry network for smaller financial institutions looking to develop profitable, high-quality products for the underserved. He soon realized there was no way to serve these consumers without offering check cashing, as well as other products and services that were outside of the credit union’s bailiwick.

The business case of reaching out to underserved consumers was not difficult for the Huntsville, Ala.-based credit union to make. Indeed, FDIC data shows that nearly 193,000 Alabama households lacked a checking or savings account in 2011 and that nearly 40% of all households in the state use non-bank financial services like check cashers. If the credit union focused on how to best reach and serve these consumers, such an effort was likely to result in new member growth, an increase in non-interest income, and a sufficient return on investment. But how to implement a strategy to serve the underserved was not as clear.