Thursday, June 13, 2013

Changing Names Reflect New Market Dynamics

Last week the Center for Financial Services Innovation (CFSI) announced it was changing the name of its flagship event, the Underbanked Financial Services Forum. The new name - Emerge: the Forum on Consumer Financial Services Innovation - aims to reflect the changing nature of the underserved market, CFSI said.

Last week the Center for Financial Services Innovation (CFSI) announced it was changing the name of its flagship event, the Underbanked Financial Services Forum. The new name - Emerge: the Forum on Consumer Financial Services Innovation - aims to reflect the changing nature of the underserved market, CFSI said.
CFSI wasn't alone: at least two leading providers of underbanked services also announced name changes last week. Spyke, a network that enables consumers to cash checks using their mobiles and have the funds loaded directly to prepaid debit cards, is now called Ingo - the Good Funds Network. And the prepaid card company Plastyc has been renamed Banking Up.

Banking Up offers a reloadable prepaid debit card platform that banks and other financial services providers can brand as their own and market to consumers who don't use or who have limited interaction with banks. H&R Block uses Banking Up for its prepaid card program, known as the Emerald MasterCard Prepaid card.

Banking Up is among a handful of prepaid card networks working with Ingo. But it won't be unique for long. Visa Inc. has put its market muscle behind Ingo, and expects to make check cashing via Ingo integral to its prepaid debit product line. "To drive broad adoption of prepaid cards you need real deposit functionality," said Lisa McFarland, Head of Prepaid Products at Visa, during a presentation at last week's forum.

Visa is one of several household names promoting prepaid debit cards as an alternative to traditional  bank accounts. JPMorgan Chase reports making significant inroads with its prepaid card, Liquid, which also supports check cashing. Jonathan Wilk, Head of Product Marketing at Chase, said last week that nearly a third of Liquid cardholders previously were unbanked; almost half were either unbanked or underbanked.

American Express is having a good run with Bluebird, a reloadable prepaid debit card it issues in partnership with retailing giant and bank wannabe Walmart. Bluebird features mobile remote check deposit functionality supported by FIS, a financial services solutions provider. Within 90 days of rolling out Bluebird last year AmEx had 575,000 sign ups, said Alpesh Chokshi, President of Global Payment Options at AmEx. And while he wasn't able to say how many of those cardholders were previously un/underbanked, Chokshi revealed that 85% of Bluebird cardholders are new to AmEx. And here's another interesting statistic: 45% of Bluebird cardholders are under the age of 35.

"This is a generational shift we're seeing," said Jennifer Tescher, CFSI's Founder and CEO.

There is also a discernible shift in attitude underway: an understanding that consumers without bank accounts are not necessarily poor; nor are they unbankable. Let's just say they're alternatively banked. CFSI estimates that alternatively banked Americans spend $78 billion a year on financial services (prepaid cards, bill payments, short-term credit, etc.) Banks would be foolish not to pursue a market with that much revenue potential, especially since they already have ready access to the requisite networks and technologies.

"We're leveraging our unique set of strengths," Wilk said in discussing Liquid at the Underbanked Forum. "We think core transactional accounts are critical," hence Liquid. But that's not all. "We also want to be able to help consumers build assets and save over time," he said.

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