Consulting firm Accenture estimates that bringing unbanked adults and businesses into the formal banking sector could generate as much as $380 billion in new revenue for banks in emerging markets by 2020. Unbanked is defined as those without an account at a financial institution or through a mobile money provider. Underbanked households have bank accounts, but also rely on alternative financial services (such as payday loan companies) because their banking relationships do not fully meet their needs.

The Federal Deposit Insurance Corp. (FDIC) found in a study that 90.6 million Americans are financially marginalized, having to rely on alternate financial services (AFS), which charge fees for transactions that are often free to customers of banks, credit unions and other federally insured institutions. An estimated 9 million U.S. households (7 percent overall), which includes 15.6 million adults and 7.6 million children, were unbanked in 2015, according to the Federal Deposit Insurance Corporation (FDIC).

Many banks decline accounts to prospective account holders if they have a record of financial mistakes, such as bounced checks or relatively minor overdrafts. Other Americans have been blacklisted from major U.S. banks because they’ve failed background checks.

ChexSystems is a debit bureau, which collects information from banks and other financial institutions. While not a part of your credit report, your ChexSystems report is similar in that it shows previous account activity, in this case with banks and credit unions. If denied a checking account, it is generally the result of a poor ChexSystems rating.

The Center for Financial Service Innovation’s 2016 Financially Underserved Market Size Study found that financially underserved Americans spent approximately $141 billion in fees and interest during 2015 to borrow, spend, save and plan.

Nearly 45 million consumers are credit invisible – meaning when lenders or potential landlords go to the credit bureaus to pull your credit history, they simply won’t find anything. Or, you may be unscoreable, meaning that the bureaus will find some credit data, but not enough to create a reliable credit score.

WI Guest Author

This correspondent is a guest contributor to The Washington Informer.

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