AmEx's recent initiative to use technology to help the plight of Amercia’s 70m underbanked citizens, but I do hope it knows that there’s no need to start from scratch. The work being done by e-money institutions in the UK, on the Visa platform in particular,
to address the needs of the financially underserved is world beating.
UK programmes of this kind have been tremendously successful for a number of years and can provide a best practice blueprint for AmEx to follow.
Prepaid and debit products have been built in partnership with welfare support institutions like Credit Unions and Housing Associations, for example, offering bank-like payment facilities to those that that have been turned away by the traditional high street
banks. The best of these deliver integrated loyalty and rewards schemes linked to value-driven retailers, enabling cash strapped cardholders to generate income from their spending.
But leveraging the right partnerships is just the tip of the iceberg. The flexibility of the e-money environment (of which AmEx is an important part) enables service providers to shape financial solutions to help groups of customers manage their funds in
a way that suits their specific circumstances, including the unbanked. On this side of the pond, e- account platforms have already been created that that enable account holders to segregate committed outgoings for, say, rent and utilities, and store them in
virtual 'envelopes', thus ensuring they remain untouched until their payments are due. This leaves remaining income easily accessible for groceries and other expenses, or to withdraw as cash from an ATM. These practices are already well established in Europe
and could help AmEx circumvent years of research.
Finally, AmEx will also need to recognise that the unbanked cannot be addressed as a single market. State-by-state variations are acute, so the ability to apply appropriate segmentation will determine the initiative’s success in the US, probably more so
than it would in the UK. Assessing and prioritising those support agencies which have the greatest potential to effect change will also be central to the realisation of AmEx’s vision. These organisations truly understand the plight of the unbanked and will
cast valuable light on the needs of those they serve. Only then will AmEx be able to develop solutions that are of true value.
We’ll be keeping a close eye on this project. I’m quite sure that UK e-money providers would be happy to lend knowledge and expertise in support of this venture.