Stuffing too much money under your mattress? You might be underbanked
Arjan Schütte has some pretty bold opinions, and he’s not afraid to speak his mind. For this, he doubtless deserves to be praised. And we certainly thank him for his openness in granting us an interview.
Still, there’s some evidence and opposing viewpoints that would seem to run counter to his claims regarding the underserved — the unbanked and underbanked, for those unfamiliar with the industry jargon — and the possibilities of mobile technologies. So it’s not entirely beyond the pale that we might gently critique a few of his assertions with counterevidence we’ve come across.
For example, Arjan at one point makes the following blanket statement:
I don’t see the [major] banks trying to serve [the underserved]. Minor initiatives and feel-good efforts around the edges, sure. Nothing at scale. For tens of millions of people, the bank will never be an attractive solution. For thousands of banks, these potential customers will never be attractive.
Michelle Parks of Crain’s Cleveland Business sees things otherwise. In an article written last September, “Lenders go after ‘Underbanked’ to fill Revenue Gap,” she noted that the unbanked and underbanked have increased in number of late, especially during the recent (ongoing) recession. Parks cites James Thurston, spokesman of the Ohio Bankers’ League, as having indicated “[t]here’s a lot of growth potential for the banks. We’re not talking a few thousand people.”
Nor does it end there. Parks has done her homework. In dialogue with Bruce Murphy, the president of Community Development Banking at KeyBank, a company that has offered products and services to the underserved since 2004, the subject of the so-called “MegaBanks” came up. Murphy asserted:
There is an awakening in traditional financial institutions that they can no longer ignore this segment. I think two years ago, people were saying, “OK, guys, we have to pay attention to this.” Things are coming to market now.
Without a doubt, Arjan’s skepticism about big banks’ interest in serving the underserved is better than some of the wide-eyed optimism that can be seen floating around out there. Nevertheless, as with much of this sort of thing, it’s too early to tell how things will pan out in this emerging market. The evidence is mixed, and a lot rides on the interpretation — the significance one ascribes to the available information and points one chooses to emphasize.
Does that mean it’s best filed under the “let’s wait and see” or the “yet-to-be-determined” folder? Maybe so, but Refundo is dedicated to providing service to the underserved in the here-and-now. So you might say we’re “banking” on the underbanked. In the next post, we’ll cover the other major side of the Arjan’s contentions, which just so happens to concern another one of Refundo’s specialties: mobile banking technology.