Underbanked is a term that has been used for many years to reference consumers that are outside of the traditional banking system. How do they differ from unbanked or subprime? How are they the same? We've got answers.
What is the difference between under banked, unbanked, and subprime?
According to the FDIC, the definition of under banked includes consumers that have at least one traditional bank account, and also those who have used a non-traditional financial instrument in the past 12 months. Based on their 2015 survey, in cooperation with the Census Bureau, they estimate 19.9% of the population is under banked based on their definition.
The FDIC defines the unbanked as those without a traditional bank account of any kind, but will utilize a non-traditional financial instrument. Those non-traditional tools can be payday loans, alternative lending institutions, and even use of pre-paid debit cards. An additional 9% of the population are estimated to be unbanked according to the same FDIC survey.
Subprime? Well, many of those in the financial industry still shutter a bit thinking of how part of the mortgage collapse was tied subprime borrowers. Basically, subprime are those with lower credit scores that would be considered a higher risk, and therefore pay higher interest rates and overall APR.
To read the FDIC survey on the underbanked/unbanked, you can access their site here:
Under banked, unbanked, and Subprime prospects can all be profitable and great prospects for your business. What methods are used to find them?
Altair Customer Intelligence has a unique advantage to provide the insight necessary to find these
prospects for you. Not only does Altair CI have authorized agent and reseller status with the standard credit bureaus (Equifax, TransUnion, and Experian) but also work with alternative credit bureaus such as FactorTrust.
If your preference is to avoid making a firm offer, use of Altair's data science team can provide you with leads through their shelf models or depending on your needs, a custom model tailored to your exact specifications....which will be a consultative approach in development.
Knowledge of the three groups above, and what challenges they each face and how to reach them, can be a difference maker in your offering. Call or email now, or simply request more information below, to take the next step in improving your efforts to reach the "Un" prospects.
Customer Intelligence......it's what we do.
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