Roughly 1.7 million people in the world are unbanked, that is, without an account in a bank or any financial institution. Financial inclusion is very important providing adults with an opportunity to increase savings, manage finances, improve investments, and reduce financial risks. It can also lower the costs of receiving and sending payments improving efficiencies. Banks and Fintech companies can capture the business of the underbanked and unbanked with the right marketing strategies and products.
Design an Accessible Product
Without doubt, people with little to no access to mainstream financial services represent a massive growth opportunity for the Fintech sector. According to Forbes, the ‘underbanked is the next trillion-dollar opportunity.’ Therefore, the biggest challenge is to penetrate the underbanked market. To achieve this, it is vital to create a financial product that is convenient. A financial service that is accessible by phone or through the web can succeed especially in rural areas where a bank or financial institution may be missing.
Considering that over half of the world’s population has access to the internet, financial services that are accessible online allow adults to consult their accounts, pay for services or goods, receive payments, invest, and even save. In parallel, there are 5 billion people in the world with mobile devices and out of this figure, more than half are smartphone connections according to Pew research. Hence, mobile or digital banking is a popular way for underbanked adults to access financial services.
Create a Fair-Priced Product
Prohibitive banking fees are some of the major reasons why adults do not use or have no access to mainstream banking services. This is also an attractive feature of many Fintech startups that can afford to provide financial services without exorbitant fees. Fintechs like Revolut, N26, and Monzo succeeded in reaching a lot of people by promoting zero fees for certain types of bank accounts. For example, Germany’s N26 raised a whopping $300 million in 2018 while Revolut boasted the most downloads at over 8 billion.
In other cases, financial services that are fairly-priced resonate well with the underbanked and unbanked. Extending loans or credit with reasonable interest rates can help the underbanked repair or build their credit history. Maintenance of checking accounts that come with low fees are also attractive. Most of all, ensuring that the money of clients is safely insured is a plus especially for Fintech startups. This instills confidence in clients knowing that they can get their money back if digital banks go bust.
Roping in new clients can be done by showing informational ads online, sending personalized emails or SMS through mobile phones. For underbanked baby boomers and seniors, info campaigns shown on televisions can also get them to sign up for financial services.
In addition, many older adults are internet savvy making it easy for them to tap mobile services. The key is to target clientele that are likely in need of Fintech services. These services must be different or new offering high value than what they are currently using, if any.
The underbanked and unbanked represent a substantial growth opportunity for Fintech endeavors. Specific marketing strategies including the creation of accessible and fair-priced products are driving forces in getting the business of the underbanked and unbanked. How fast these services are going to be provided will also determine how many clients will sign up and stay.