Banking the Unbanked

Smartphones, mobile financial services expanding economic inclusion

ROCKVILLE, Md. -- Mobile financial services are helping to reshape consumer banking relationships. For the unbanked, they offer a realistic way to expand economic inclusion, according to market research publisher Packaged Facts in the report, Unbanked and Underbanked Consumers in the U.S., 4th Edition.

mobile banking

“Mobile financial services can provide account information from virtually any location, at any time. Along with this information, they can provide tools consumers can use to manage their finances, conduct transactions, and avoid potential problems such as overdrafts, late fees, and fraud. As a result, this technology has the potential to make banking relationships more convenient and sustainable for households that otherwise may experience such concerns,” said David Sprinkle, research director at Packaged Facts.

Mobile phones have fast become something nearly every consumer—including the unbanked—has. As of 2015, 93% of unbanked adults have a mobile phone. With mobile phones reaching saturation among the unbanked, text-based alerts can be a reality for all. More importantly for the financial services industry, almost two-thirds have a smartphone, giving these consumers access to 24/7 mobile banking convenience and the potential to use banking services at lower costs. Nevertheless, because a third of unbanked adults don’t have a smartphone, that gap needs to close further to give a wider swath of the unbanked opportunity to leverage this option.

Black or Hispanic millennials (age 18 to 34) are more than twice as likely to be unbanked than banked. These younger minority groups are also major smartphone users, which provides potential to connect them with mobile banking and payment options. Yet while smartphone usage penetration among unbanked 18-to-24-year olds, Hispanic and black consumers is relatively strong, household income remains a stumbling block: only 44% of adults living in homes with an income under $25,000 have smartphones.

Older unbanked consumers are also far less likely to have a smartphone. Just a quarter of adults age 65 and up have a smartphone, which suggests smartphones are simply not the answer for reaching this group.

The good news is that mobile banking usage rates suggest real success in engaging underbanked consumers, who may be more likely to rely on it as their primary banking method than fully banked households; thus, for younger and middle-aged unbanked, a brighter, more connected financial services world lies ahead.

But fully realizing the potential of mobile financial services for the unbanked will also mean engaging the unbanked more directly and more personally, said Packaged Facts. Mobile phones can provide the tools, but people and institutions must ideally provide the guidance, education and one-to-one interaction necessary to create longer-term financial relationships and proper, proactive use of mobile tools and technology.

Rockville, Md.-based Packaged Facts, a division of, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods and pet products and services.

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