In the past, had you showed up to the grocery store without your wallet, you wouldn’t have been able to leave with your groceries in tow. Today, things have changed. Leaving behind your wallet isn’t such a big deal, as long as you have your smartphone in your back pocket. The smartphone, when equipped with Mobile banking and payment apps, is called a mobile wallet, and it’s the digital-stand in for you old-fashioned bill-fold. Since few people forget to leave their house without their phones – and major retailers like Walmart, Apple, and Starbucks incentivize mobile payments – the mobile wallet is a convenient way to pay for transactions for the Underbanked.
A Quick Overview Of The Underbanked
The underbanked is a growing number of people in a financially unusual position. Unlike the unbanked, who have no account whatsoever, the underbanked have a checking and/or savings account with a traditional bank. But that’s it. They don’t contact these traditional financial services when they need a personal loan, a line of credit, or investment opportunities.
Some people are underbanked involuntarily. There’s something in their financial history that flags them as suspect to the country’s biggest banks, like a poor or non-existent credit rating. Others are purposefully underbanked, choosing to align themselves with a growing number of fintech companies offering online alternatives to conventional financial products.
Some Fintech Alternatives
However they became underbanked, if they want to invest or borrow, they sign up for robo-advisors, open mobile banking accounts, and search for payday loans online. These online platforms are increasingly automated, making it possible for the underbanked to sign up, open accounts, or apply for cash loans with their computer or phone. The tech behind robo-advisors can automatically create a portfolio that reflects consumers’ budgets and interests. An online platform allows direct lenders like MoneyKey to process loan applications 24/7. This constant availability is shared by a mobile bank like Simple, which offers checking and savings opportunities with fewer roadblocks for the underbanked. They don’t have a physical location because everything is done online.
Whether investing, saving, or borrowing, these alternatives provide an easier, faster, and more convenient option than traditional banks for both the underbanked and those who typically bank through conventional means.
Where Does The Mobile Wallet Come In?
Previously, with only traditional banks as an option, the unbanked and underbanked would not have had access to digital payment forms. As the push towards a cash-less economy grows stronger each day, the typical financial services would have discriminated against these individuals, making it difficult (if not impossible) to operate within a cash-free society.
Many fintech companies see the opportunity in this population and are specifically targeting the underbanked with the services they offer. They’ve removed the typical red tape that can prevent the underbanked from investing, opening additional savings accounts, or securing an installment loan. They’re also online by default, many of which rely on apps to function.
Formerly a population excluded from digital payment forms, the underbanked that take advantage of fintech solutions can now join the millions who have mobile wallets. It’s now possible for underbanked to sync their mobile accounts and use Apple Pay, Walmart Pay, Venmo, or Amazon Cash. With these tools at their disposal, the underbanked can use their mobile wallets to access and operate within a cash-free economy. All that’s standing in their way is their own hesitancy to adopt digital payments.
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