An article about an ignored market: the unbanked

[TrustCash]

Here's an article that's slowly becoming relevant in today's market. It's about servicing a part of society who have no bank accounts or have no access to credit.



(from http://www.time.com/time/magazine/ar...653666,00.html)

Profiting from the Unbanked
By Anita Hamilton / Norcross

"Aurelio Leonel Alvarez-Rosales earns about $300 a week painting houses in the sprawling suburbs north of Atlanta. He lives paycheck to paycheck and often has nothing left over at the end of each week. So on Friday nights, when Alvarez-Rosales, 21, goes to cash his check, he pulls into the parking lot at the Norcross branch of Banuestra, an alternative financial institution aimed at serving the estimated 40 million adults in the U.S. without bank accounts. For him, every dollar counts, and compared with the 24-hour Atlanta Check Cashers outlet down the road, which charges a 3% fee to cash a payroll check, Banuestra is a bargain, taking just 1%, or $3, out of his weekly pay. He doesn't even consider the Wachovia bank across the street on Jimmy Carter Boulevard. It closes too early, and more important, makes potential customers like Alvarez-Rosales jump through too many hoops to get service.

Banuestra is one of the new breed of financial-service providers--which now include Wal-Mart--that aim to marry the convenience of a check casher with the relative security of a bank. By offering lower basic check-cashing fees along with debit cards and reasonably priced consumer loans, these businesses hope to pocket a chunk of the more than $10 billion in fees that check cashers, payday loaners and pawn shops collect each year. Long ignored by traditional financial institutions, the unbanked get their modest earnings shaved even thinner by the high fees they pay simply to cash their paychecks. That's beginning to change as banks seek out new revenue sources and the unbanked enjoy a little more financial flexibility."

Read more: http://www.time.com/time/magazine/ar...#ixzz1cAqMz0TX

[TrustCash]

Here's a recent article about this new demographic. If banks are going to those unbanked and underbanked, should online businesses and even porn, be far behind?

By Martha C. White | June 6, 2011 |

"During the recession, the number of people categorized as unbanked ? without a checking or savings account ? or underbanked ? without access to credit ? increased. In a new study, consulting firm KPMG suggests that banks can make money from this group, not by bringing them back into the financial mainstream, but by offering them ?alternative? products like prepaid debit cards and money orders.

Banks aren?t the only ones seeing a potential market in the unbanked. Some big-box retailers have begun offering bank-like services, letting customers cash a check or pay a utility bill."

Read more here: http://moneyland.time.com/2011/06/06...unbanked-next/

[TheSquealer]

Perfect, more credit for those who dont deserve it! Lets start setting ourselves up for the next financial collapse ASAP!

Spend spend spend spend....

[Shotsie]

Walmart is figuring out another way to suck the lifeblood out of this country....

[Shotsie]

Originally Posted by TheSquealer

Perfect, more credit for those who dont deserve it! Lets start setting ourselves up for the next financial collapse ASAP!

Spend spend spend spend....

Where does it say in those articles they're offering credit? The debit cards are pre-paid. Although, it's probably only a matter of time before they do.

[TheSquealer]

Originally Posted by Shotsie

Where does it say in those articles they're offering credit? The debit cards are pre-paid. Although, it's probably only a matter of time before they do.

The aspiration of an irresponsible financial idiot should be to get his shit together or be left out as an incentive... instead we've built a financial system that learned to cater to and service the lowest common denominator... THAT is what caused the housing bubble and collapse and the subsequent financial problems to begin with (oops! forgot this is gyf... i mean't "I blame George Bush"). It all began with credit to people who don't deserve it and making shitty mortgages made to people who should have never qualified for mortgages.

[Shotsie]

Originally Posted by TheSquealer

The aspiration of an irresponsible financial idiot should be to get his shit together or be left out as an incentive... instead we've built a financial system that learned to cater to and service the lowest common denominator... THAT is what caused the housing bubble and collapse and the subsequent financial problems to begin with (oops! forgot this is gyf... i mean't "I blame George Bush"). It all began with credit to people who don't deserve it and making shitty mortgages made to people who should have never qualified for mortgages.

Banks are supposed to be able to assess risk. They didn't. That kind of shit happens when they're unregulated, and they're greed goes unchecked. I wouldn't blame George Bush though - although he knew about the problem and ignored it - I would blame every president going back to Ronald Reagan, greedy financial institutions, and last but not least American consumer bots. But the financial institutions should bear the brunt of the blame. They are the professionals in their field. If an electrician comes to your house to work on something and gets electrocuted, does he blame the electricity? No, that would be fucking retarded.

[TheSquealer]

Yeah... right wing this, republicans that... blah blah blah. Of course when its happening under a democratic president like Clinton, he's just doing the lords work

Give me a fucking break

Banks don't assess risk when it comes to mortgages. The markets do. Loans are sold. The markets determine what level of risk is tolerable. The markets determine the types of loans. The markets determine interest rates. The problems were system wide and global, not just because of some idiotic and simplistic idea of "greedy bankers" who prey on the innocent.

You'd know all this if you had the slightest clue how mortgages work.

[BIGTYMER]

Clinton not Bush started this mess. Glass Steagall Act.

[BIGTYMER]

When Clinton got rid of the Glass Steagall Act the banks turned into casinos..

[Shotsie]

Originally Posted by TheSquealer

You'd know all this if you had the slightest clue how mortgages work.

I don't think you have the slightest clue of what caused the financial collapse. Maybe you should look into it.

[ottopottomouse]

Originally Posted by TrustCash

"Aurelio Leonel Alvarez-Rosales earns about $300 a week painting houses in the sprawling suburbs north of Atlanta. He lives paycheck to paycheck and often has nothing left over at the end of each week. So on Friday nights, when Alvarez-Rosales, 21, goes to cash his check, he pulls into the parking lot at the Norcross branch of Banuestra, an alternative financial institution aimed at serving the estimated 40 million adults in the U.S. without bank accounts. For him, every dollar counts, and compared with the 24-hour Atlanta Check Cashers outlet down the road, which charges a 3% fee to cash a payroll check, Banuestra is a bargain, taking just 1%, or $3, out of his weekly pay. He doesn't even consider the Wachovia bank across the street on Jimmy Carter Boulevard. It closes too early, and more important, makes potential customers like Alvarez-Rosales jump through too many hoops to get service.

1% is ridiculously low. I think the cheque cashing shops here take about 7%.

[Shotsie]

Originally Posted by TheSquealer

Yeah... right wing this, republicans that... blah blah blah. Of course when its happening under a democratic president like Clinton, he's just doing the lords work

By the way, I said every president going back to Ronald Reagan, that would include Clinton. I think you need to brush up on your reading comprehension as well.

[stocktrader23]

Originally Posted by Shotsie

By the way, I said every president going back to Ronald Reagan, that would include Clinton. I think you need to brush up on your reading comprehension as well.

The stupid is strong in this one, you'd probably feel better letting it go. As you can see this has nothing to do with credit but he's still yelling about giving credit to the poor. If he can't even figure out that simple of a concept his brain will obviously purge anything more complex.

[TheSquealer]

Originally Posted by Shotsie

I don't think you have the slightest clue of what caused the financial collapse. Maybe you should look into it.

Thank you for the well reasoned and well thought out rebuttal. It's certainly forced me to think and to see the entire financial system in a new light. I used to think those like you who managed to reduce a complex, multifaceted situation with mortgage backed securities, which was a global problem, not simply a US problem to a few "greedy banks". I used to think people like you had zero clue how mortgages actually worked, how they are packed and sold and how the actual terms and types of loans that are made are determined by market demand for those securities as a long term investment by institutional investors world wide.

I stand corrected.

At the end of the day, it was all very simple. Government creates feel good legislation to force banks to make loans to people that should never qualify for a loan... over time, they get better and better at it. The long term consequence was that banks got VERY good at making shitty loans, packaging them and selling them to investors. A lack of regulation wasn't what created banks to get great at making shitty loans selling them. It wasn't an Administration that was giving shitty mortgage backed securities AAA investment ratings. However, its quite clear that the entire system failed from the executive branch, to legislative branch, to regulation, to the financial markets, to investors, both domestically and globally.

The problem with the idea of blaming "greed" is that it over simplifies a very complex problem and an insane number of almost impossible circumstances that happened to align themselves, all to create a nearly impossible event.

[Shotsie]

Originally Posted by TheSquealer

Thank you for the well reasoned and well thought out rebuttal. It's certainly forced me to think and to see the entire financial system in a new light. I used to think those like you who managed to reduce a complex, multifaceted situation with mortgage backed securities, which was a global problem, not simply a US problem to a few "greedy banks". I used to think people like you had zero clue how mortgages actually worked, how they are packed and sold and how the actual terms and types of loans that are made are determined by market demand for those securities as a long term investment by institutional investors world wide.

I stand corrected.

At the end of the day, it was all very simple. Government creates feel good legislation to force banks to make loans to people that should never qualify for a loan... over time, they get better and better at it. The long term consequence was that banks got VERY good at making shitty loans, packaging them and selling them to investors. A lack of regulation wasn't what created banks to get great at making shitty loans selling them. It wasn't an Administration that was giving shitty mortgage backed securities AAA investment ratings. However, its quite clear that the entire system failed from the executive branch, to legislative branch, to regulation, to the financial markets, to investors, both domestically and globally.

The problem with the idea of blaming "greed" is that it over simplifies a very complex problem and an insane number of almost impossible circumstances that happened to align themselves, all to create a nearly impossible event.

Go back and read my post. I said I would blame every president going back to Ronald Reagan, greedy financial institutions, and last but not least American consumer bots. That's a pretty concise way of saying everything that it just took you three paragrphs to type out.


The fact is that these banks created mortgage-backed securities filled with loans they knew were goign to fail so they could sell them to clients completely unaware that they had sabotaged them by intentionally picking the misleadingly rated loans most likely to be defaulted on. That's why credit default swaps were created. Yeah, the banks didn't have any idea what was going to happen.

[TheSquealer]

Originally Posted by Shotsie

The fact is that these banks created mortgage-backed securities filled with loans they knew were goign to fail so they could sell them to clients completely unaware that they had sabotaged them by intentionally picking the misleadingly rated loans most likely to be defaulted on. That's why credit default swaps were created. Yeah, the banks didn't have any idea what was going to happen.

What you refuse to accept is that the bulk of investors who invest in these types of securities also understood they were shit. It was one huge game of musical chairs where investors were trying to get in and get out before the music stopped. The entire securities market has been spiraling out of control for a long time now where ancient, outdated ideas like value, earnings and long term business strategy have been replaced by short term share/investment flipping.

Like Bernie Madoff... or Enron. I think Enron never once provided investors with basic income statements that explained where and how they were making money. When a guy asked for one in a shareholders phone call, the CEO called him an asshole and that was basically the end of it. They did however provide constant materials on all the great things to come and all the great projects and all the expected future earnings. Investors don't care how they make money or how its made, they just want to make money. Same with mortgage backed securities.

EVERYONE who is a part of that system is to blame... from the 20 year old stripper who was buying a 500K house based on stated income, to the institutional investors worldwide who were investing in shit securities based on ROI, not value. It's not just some banks that cause the worlds financial system to go sideways.

You are blaming "banks". This was a cultural failure as much as anything else.

It wasn't "Banks greed". It was "everyone's" greed for more, from top to bottom.

That is what is somewhat comical about the article. People who can't qualify for a credit card and who can't open a bank account, should be focused on getting their shit together as these things should be earned by a track record of proven responsibility. Instead, they need a whole new set of products to cater to them, to make it easier to spend money they don't have and can't afford to spend... hence, that same cycle is now repeating itself.

[BlackCrayon]

do you really want broke ass illegals, homeless people and drug addicts as your main 'market'..because thats who the unbanked mostly are..oh and paranoid conspiracy theorists.

[alias]

Originally Posted by Shotsie

Walmart is figuring out another way to suck the lifeblood out of this country....

Funny shit.

[TheSquealer]

Originally Posted by BlackCrayon

do you really want broke ass illegals, homeless people and drug addicts as your main 'market'..because thats who the unbanked mostly are..oh and paranoid conspiracy theorists.

Sure, why not? We spent the last 15 years giving credit cards to 18 year olds... may as well figure out how to get the homeless and junkies involved. I mean, where else do you go from there?

[Shotsie]

Originally Posted by TheSquealer

Sure, why not? We spent the last 15 years giving credit cards to 18 year olds... may as well figure out how to get the homeless and junkies involved. I mean, where else do you go from there?

Anything to keep worker's wages down so we can compete with third world countries......That's laissez-faire capitalism. Once they break the unions, abolish minimum wage laws, and remove all social safety nets it will be an all out race to the bottom for the middle/working class. The rich get richer, and the poor get poorer. Right now in this country we have a record number of homeless people, side by side with a record number of unoccupied homes. That's crazy. You can just love it or leave it. Adapt or die, and all that other bullshit.

[Shotsie]

Originally Posted by TheSquealer

What you refuse to accept is that the bulk of investors who invest in these types of securities also understood they were shit. It was one huge game of musical chairs where investors were trying to get in and get out before the music stopped. The entire securities market has been spiraling out of control for a long time now where ancient, outdated ideas like value, earnings and long term business strategy have been replaced by short term share/investment flipping.

Yeah, all the middle class working stiffs who's pension funds and 401ks were invested in mortage-backed securities knew the risk. They were too busy working sixty hours a week to keep up their standard of living to know what the investment banks were doing with their money. Not only were the banks practicing predatory lending on these people, they were fucking them out of their retirement money on top of it. My neighborhood loanshark isn't as ruthless as some of these so-called legitimate financial institutions. There's a shitload of people affected by this that had nothing to do with it.

[GAMEFINEST]

most retailers will join im sure

[TheSquealer]

Originally Posted by Shotsie

Yeah, all the middle class working stiffs who's pension funds and 401ks were invested in mortage-backed securities knew the risk. They were too busy working sixty hours a week to keep up their standard of living to know what the investment banks were doing with their money. Not only were the banks practicing predatory lending on these people, they were fucking them out of their retirement money on top of it. My neighborhood loanshark isn't as ruthless as some of these so-called legitimate financial institutions. There's a shitload of people affected by this that had nothing to do with it.

Of course there are a lot of people affected that had nothing to do with it. The entire nation was affected.

This is no different to me than blaming McDonalds for making people fat. It affects us all. Medical costs, insurance costs and in most cases, our own personal health. However, we all know its shit food. We all know its not healthy. We all know its not something we are meant to be eating.

You can't place blame ONLY on "greedy banks". "Predatory lending" is most often another word for "that borrower couldn't afford it". That responsibility too, also lies in part with the borrower.

Again, its EVERYONES fault. We live in a nation of excess consumerism. Thats not "greedy banks", thats the result of an entire nation thats lost its way. EVERYONE...

[TheSquealer]

Originally Posted by Shotsie

Anything to keep worker's wages down so we can compete with third world countries......That's laissez-faire capitalism. Once they break the unions, abolish minimum wage laws, and remove all social safety nets it will be an all out race to the bottom for the middle/working class. The rich get richer, and the poor get poorer. Right now in this country we have a record number of homeless people, side by side with a record number of unoccupied homes. That's crazy. You can just love it or leave it. Adapt or die, and all that other bullshit.

The rich get richer and the poor get poorer because the rich are not out buying gold grills, new nikes and renting 24" spinners for their honda civics.

The US economic problems are largely US cultural problems.

[Captain Kawaii]

Originally Posted by BIGTYMER

When Clinton got rid of the Glass Steagall Act the banks turned into casinos..

Clinton Like Obama is a Repligican in a jackass suit... i.e. a wolf in sheep's clothing...

[kane]

My uncle survived for about 20 years with no bank account and very little credit. He had one credit card that he'd gotten years ago and he worked the same job (construction) for the same company all those years. The owner of the company knew him and liked him so he paid him in cash. Each payday he got a check stub showing taxes taken out and earnings, but instead of a check he got cash. He got money orders to pay his rent and other bills and anything extra he put in a small safe he had.

After about 20 years of living like this he retired and had to get a bank account for some of his retirement stuff because they wanted to do direct deposit. He said when he went into a bank to get an account and told them that he hadn't had an account ins about 20 years they looked at him like he was an alien.

[DWB]

I know a lot of girls in the inner city where I'm from who use those expensive check cashing places to cash their IRS refund check. One chick said the fee to cash her IRS check was $900!!!!!!

Poor people stay poor for a reason.

[Barry-xlovecam]

Most people that do not have bank accounts are either hiding their income for some reason or the poor.

[TheSquealer]

Originally Posted by DWB

I know a lot of girls in the inner city where I'm from who use those expensive check cashing places to cash their IRS refund check. One chick said the fee to cash her IRS check was $900!!!!!!

Poor people stay poor for a reason.

The guy who wrote Rich Dad, Poor Dad made an interesting and what I felt to be a very thought provoking comment... "what is an inner city, single mother of 2 going to teach her kids about saving, business and investment?"

[INever]

Originally Posted by Barry-xlovecam

Most people that do not have bank accounts are either hiding their income for some reason or the poor.

Some people just feel intimidated by anything "quality".

They feel more "comfortable" in a shitty check cashing place or a smelly motel.

[ilnjscb]

Originally Posted by TheSquealer

The guy who wrote Rich Dad, Poor Dad made an interesting and what I felt to be a very thought provoking comment... "what is an inner city, single mother of 2 going to teach her kids about saving, business and investment?"

I would have written that guy off, but they interviewed him when banks started failing in late 2008 and he said, "Buy silver" when they asked where to put money. Normally those guys say "I can't say anything... liability...blah blah" but he came right out and said silver, and was completely right. Maybe that was a fluke, but maybe he is what he says he is.