KeyBank and CFSI report highlights customer preferences of 'underbanked'

Source: KeyBank

Underbanked consumers want traditional financial services relationships according to a paper released today by The Center for Financial Services Innovation (CFSI).

"The Power of Experience in Understanding the Underbanked Market" offers new insights into underbanked consumer preferences and decision-making that can help banks and other financial institutions offer the products and services needed to deliver on the underbanked market's potential.

"Key is committed to better understanding the business opportunities that exist with underbanked consumers to determine how we can provide a broader array of services to this market. This study gives us practical information that will help all of us in the financial industry serve underbanked consumers better and develop lasting relationships with them," said Bruce Murphy, president of Community Development Banking at KeyBank.

A major finding is that underbanked consumers make financial decisions differently than mass market customers, strongly emphasizing intangibles such as respect, trust, safety, security, and a sense of belonging. Yet they can also be segmented along more traditional lines, such price and convenience. Among the study's other findings:
  • These consumers cash an average of 20 checks a year, with an average check size of $452.
  • A majority are very open to having a relationship with a bank or credit union.
  • More than 60 percent of those surveyed have a checking account and 45 percent have a savings account. Of those who do not have such accounts, 30 percent said they would like to open a checking account in the next year, and 39 percent would like to open a savings account.Although fewer currently have other financial products, many hope to have a retirement account (51 percent), CDs (50 percent), college account (50 percent), or loan (36 percent) within five years.

"To attract underbanked consumers and win their trust, banks need to understand who these consumers are and how they make decisions, and then deliver experiences that are relevant and desirable," said Jennifer Tescher, CFSI's director.

The paper is being released at the second annual Underbanked Financial Services Forum June 10-12 in Dallas, co-produced by CFSI and SourceMedia. Its results will be discussed in the "Know Your New Customer: Success Stories on Segmenting and Marketing to Underbanked Prospects," session on Monday, led by KeyBank's SVP Thomas Hawn. The study, underwritten by KeyBank and CFSI and conducted by Market Innovations, surveyed 760 underbanked consumers across the United States, using qualitative and quantitative techniques as well as ethnographic research.

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