The Unbanked Spend
July 02nd, 2012
According to Core Innovation Capital, the under-banked spend $45 billion every year on financial services. Those “spends” include:
Credit
- Mortgage loans: $9 billion
- Retail payday lending: $4.5 billion
- Internet payday lending: $3 billion
- Pawn Shop: $3 billion
- Auto title loans: $1.25 billion
- Refund anticipation loans: $500K
- Rent-to-own: $5 billion
- Overdrafts: $7 billion
- Credit cards: $2 billion
Services
- Check cashing: $2 billion
- Credit score services: $1 billion
- Remittances: $2.5 billion
- In-store bill pay: $1.9 billion
- GPR prepaid: $1 billion
- Payroll prepaid: $1 billion
- Checking accounts (not overdrafts): $1 billion
One insight that should be readily gleaned from these sales figures is that there is a substantial opportunity to offer services to this sector. These consumers are buying financial products. Moreover, new entrants should be able to get a cut at a lot of producer surplus. Of course, it is only a win-win if new entrants find a way to create something with pricing that gives consumers better value. We don’t want to see more internet payday lending.
Keith
July 3, 2012
Your comment “We don’t want to see more internet payday lending” is fine for you but what about the people who “choose” to use these credit sources and the people who take the risks on lending the money? No one is forced to use these sources it is simply an option for them. Many people do not have the same options available that you may have and it is up to them to make the choice that is best for them not for you to determine that “We don’t want to see more internet payday lending.” What gives you the right to determine what should be available to the marketplace?
Steve Rabago
July 6, 2012
Helping the unbanked and underbanked consumer is a personal mission at http://www.ZimpleAuto.com and http://www.ZimpleMoney.com. At ZimpleAuto, we are encouraging dealers to make loans to the Underbanked and NonBanked consumer be extending loans and by using ZimpleMoney services to resell portfolios to Credit Unions, Community Banks, and Private Investors. It is hard for be to believe that Zimple has had a difficult time raising funds to expand our business more aggressively. We are a company whose purpose is to help underserved communities and consumers…Core Venture Capital should be all over us!
Doug
July 9, 2012
It’s amazing the attention refund anticipation loans get! $500k, really! Everything else on this list is in the billions! The fees charged for all these other services are so much more relevant to the unbanked.