Mobile, low-income consumers and banking: what’s the connection?

Many people might be surprised to learn that mobile banking represents a relatively stronger opportunity to meet the needs of lower-income Americans. Last week I was the lead-off presenter at an FDIC panel on to use growing methods to meet the needs of the underserved, with primary focus on mobile finance as well as prepaid “card” accounts. I relied on expert analysis of a number of Javelin research studies, including a September survey of 3,18o US consumers to present the implications of the following data.

US consumers who lack a depository bank or credit union account are:

  • Less likely to have a landline phone connection, by 10 percentage points
  • More likely to have a mobile phone, by six percentage points
  • Slightly More likely to own a smartphone (perhaps surprisingly)

Given today’s plethora of innovative new financial services methods, an increasing quantity of individuals who lack a depository account now have another form product with a financial institution (which is why the FDIC hosted the event Javelin presented at). For example, prepaid cards are increasingly replacing payroll checks and as a result we have the potential to improve the health and well-being of lower income Americans.

The previous findings bring about the question: “when using ‘mobile banking’ to access accounts, how do US underbanked consumers manage their finances in comparison to people of average income?”

  • Underbanked use mobile at an equal or slightly higher rate for pragmatic and essential activities such as paying bills and receiving email alerts
  • Underbanked use mobile at a significantly lower rate for checking balances, viewing statements, transferring funds and monitoring transactions.

Underbanked are also more likely to be hyperactive users of mobile financial account management, representing a greater proportion of those accessing accounts within the last seven days of our research survey. Attention holiday shoppers and sellers: the finding about usage frequency extends to purchasing as well, with more underbanked using their mobile device to buy goods.

We must also take care to understand threats to lower income people when offering mobile or prepaid solutions. Javelin data show that lower income individuals are more likely to be the victim of crime perpetrated by so-called friends and family members, and out-of-pocket losses are often much higher as well. Therefore, different strategies for education and empowerment capabilities may be appropriate.

Strategist and technologists take heed: while it’s easy to think of new technology as having primary appeal to higher income individuals, mobile defies this truism because it is more likely to be the sole way for lower-income people to mange accounts and purchase goods.

Category: Dynamic Payments, Mobile, Omnichannel Financial Services, Security, Risk & Fraud

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One Response


  1. Joan Bunny says:

    Hey, Jim its not just an class income issue, it effects all the classes. Why do you have to present it this way creating class warefare? You are showing you political leanings favoring the lefties you are supportng ie: our current president !

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