Unbanked to Homeowner

The success of alternative providers has demonstrated that there is a large market for financial services within the low-income community and that it is possible to tap into it profitably with the right combination of products, services, and marketing. At the same time, a confluence of demographic, technological, competitive, and public policy events has made the mainstream financial services community more interested in serving this market with an array of products beyond credit. Despite these positive developments, however, many barriers remain to asset building by the unbanked and underserved. These include outdated banking regulations, the conservative culture of traditional institutions, a need for better market data, and the lack of business models that adequately address the true potential of the lower-income market. A number of innovative programs have shown that it is possible to overcome these problems, especially by focusing on creative strategies such as workplace distribution and education, remittance provision, stored-value cards, bank/nonbank partnerships, and self-service delivery.

This is, therefore, a good time to be hopeful about market opportunities to put low-income, low-asset consumers on an asset-building track with mainstream financial institutions. Furthermore, the positive developments described in this chapter—already under way in the market—can be greatly encouraged by initiatives that will improve the regulatory system, assist providers in forming creative partnerships, provide better market data, and help the mainstream financial services industry to understand the challenges and opportunities presented by the unbanked, underserved, and lower-income market.