Paul Penrose - Finextra - London 18 December, 2007, 12:41 0 likes

Jan-Oloff, welcome to the Finextra community. Your comments on the A&L strategy are interesting and perceptive.

We recently received a research note from Celent, which identifies pre-paid cards as a major opportunity for disintermediation in the banking sector, with non-bank competitors tapping the market as a means to provide financial services to the unbanked sector of the population.

"The nontraditional/nonbanks have realized that a bank account can actually be broken down into two major components: one is the actual account, and the other is a wide variety of value-added, potentially fee-based ancillary products/ services, such as debit cards, bill pay, direct deposit, etc. Nontraditional/nonbanks also offer ATM withdrawals, mobile account access, international remittance, savings features, and overdraft protection."

The report, which looks at the US market, concludes that banks have yet to pursue the growth potential of general purpose reloadable cards for the unbanked population, which Celent estimates as an untapped US$192 billion market.

It would indeed seem that the approach adopted by A&L would enable the bank to take an agile approach to this market opportunity while skirting the regulatory constraints - and any negative old-school banking connotations - that might encumber traditional deposit takers.