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 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, accountancy companie ...
and products typically offered by
retail banks
Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking. Banking ser ...
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 ...
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
Poverty is the state of having few material possessions or little
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 pawnbrokers.
Many people who are classified as underbanked may also have a language barrier, such as migrant workers, 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, f ...
s.
The underbanked are a distinct group from the '' unbanked'', 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 initiatives such as the Grameen Bank that aim to improve the provision of banking and financial services to poor communities.