Underbanked Consumer Market

The underserved consumer credit market represents one of the most lucrative opportunities for financial institutions in today’s changing industry. Banks that can effectively acquire underserved consumers without compromising their credit risk standards can gain access to a vast pool of qualified, profitable customers. The challenge is how to effectively decision consumers who have a lack of traditional credit histories.

Defining Unbanked and Underbanked
The defining characteristic of the 70 million underserved consumers in the United States is their lack of traditional credit bureau data. In the case of underbanked consumers, like students or senior citizens, there is a lack of recent credit history. In the case of unbanked consumers, like recent immigrants, there is a complete lack of any traditional credit data. In both cases, the consumers are usually declined for credit, despite the fact that many of them are excellent credit risks. The key to succeeding with this market is the use of alternative credit data and analytics that enable financial institutions to effectively segment the underserved population into prime—able to manage credit—and subprime—unable to manage credit—customers.

Reaching Out to the Underserved
Some financial institutions have begun to realize the value of underbanked and unbanked consumers. The first step to effectively decision underserved consumers is to recognize the underlying value of bureau thin files and no hits. By incorporating alternative credit data pulls and analytic processes after a thin file or no hit bureau response, financial institutions can literally take a second, closer look at these applicants.  

Effective Decisioning with Alternative Data Sources
The right tools empower lenders to decision well for the underserved market without sacrificing time and money. The foundation is a flexible decisioning environment capable of least-cost routing to find the right vendor at the right price to retrieve the right data. Zoot’s Vendor Path solution delivers this capability with a single connection to dozens of vendors.

A second factor is the ability for business users to make changes to credit criteria like score cutoffs and interest rates, in realtime. Zoot’s instant rules GUI allows lenders to proactively modify select criteria relevant to the underserved market at a moments notice.

A Growing Market
Being positioned to serve the underserved is an advantage to customer acquisition in today’s market and will only expand as the profile of U.S. consumers evolves. Financial institutions that have systems in place to monitor fraud and risk while maximizing flexibility will be ahead of the trend.

Contact Zoot at (406) 556-7555 or fill out our information request form today!