The underbanked is a characteristic describing people or organizations who do not (or volunteer to not) have sufficient access to mainstream

financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

and products typically offered by retail banks and thus often deprived of banking services such as

credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...

s or

loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...

s. The underbanked can be characterized by a strong reliance on non-traditional forms of finance and micro-finance often associated with disadvantaged and the poor, such as

cheque A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...

cashers,

loan shark A loan shark is a person who offers loans at extremely high interest rates, has strict terms of collection upon failure, and generally operates outside the law. Description Because loan sharks operate mostly illegally, they cannot reasonably ...

s and

pawnbroker A pawnbroker is an individual or business (pawnshop or pawn shop) that offers secured loans to people, with items of personal property used as collateral. The items having been ''pawned'' to the broker are themselves called ''pledges'' or ...

s. Many people who are classified as underbanked may also have a

language barrier A language barrier is a figurative phrase used primarily to refer to linguistic barriers to communication, i.e. the difficulties in communication experienced by people or groups originally speaking different languages, or even dialects in some ...

, such as

migrant worker A migrant worker is a person who Human migration, migrates within a home country or outside it to pursue work. Migrant workers usually do not have the intention to stay permanently in the country or region in which they work. Migrant worker ...

s, be unable to access banking facilities due to distance, such as the elderly, or simply feel uncomfortable using

automated teller machine An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fun ...

s. The underbanked are a distinct group from the ''

unbanked The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. Causes Some reasons a person might not have a bank ...

'', who are characterized by having no banking facilities at all.

Distribution

Small countries have fewer banking provisions than large countries, even allowing for the smaller size of their economies.

Remediation

There are many

microfinance Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...

initiatives such as the

Grameen Bank Grameen Bank ( bn, গ্রামীণ ব্যাংক) is a microfinance organisation and community development bank founded in Bangladesh. It makes small loans (known as microcredit or "grameencredit") to the impoverished without requi ...

that aim to improve the provision of banking and financial services to poor communities.

Distribution

Remediation

See also

References

Further reading