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Banks and credit unions are marketing to a whole other demographic. Here’s why that’s good news.

A majority of Americans are now financially struggling. That isn’t news to the 43 percent of Americans who can’t keep up with their bills and credit card payments.

But for some reason, it is news to banks and other financial institutions; who are studying how to better market their products toward a segment of generally lower-income Americans known as “unbanked.”

These are people with no checking or savings account, and a new study by the Center for Financial Services Innovation found that they make up about seven percent of the population. CFSI also found that 25 percent of Americans qualify as “underbanked;” Meaning they only had a savings account or a checking account and had cashed checks at non-bank institutions like liquor stores or drug stores in the past year.

This presents a window of opportunity for banks, argues Kimberly Gartner, senior vice president of CFSI. Since the study also found that only 9 percent of consumers believes their bank is improving their financial health.

She and others from American Express, the Ford Foundation, and MetLife Foundation gathered on March 26 to discuss how they’d use the data from CFSI’s study. It broke down survey respondents into three different tiers — healthy, coping, and vulnerable; Depending on how well they were managing their finances.

“We participated [in order to] develop new tools and capabilities to help consumers understand how to manage their money,” said Denise Leonhard, vice president of enterprise growth strategy at American Express.

Here’s what the study found, and some predictions about how those will influence the future of banking…

1. More than half of Americans are financially struggling.

One key finding of the study was that 57 percent of the population; or 138 million people, struggle to make ends meet. Over one-fifth of respondents said they weren’t sure if they even had a household budget.

“We found that 27 percent could only make ends meet for a week or less if income fell suddenly,” said Aliza Gutman, one of the authors of the study. “I was surprised and a little concerned at the number of people who didn’t know how long they could make ends meet.”

Among those who never run out of money before the end of the month; almost all households in the “healthy” segment said they never do. While less than half of the “coping” segment do, and plunges to single digits for vulnerable households. In other words, for these people, it is far more likely for them to run out of money before the end of the month than to have it.

What we can expect to see as a result: Prepaid products traditionally used by unbanked Americans will be updated to include features that track spending, Leonhard said. American Express has already done this, with a loadable prepaid debit card that can be used at ATMs and an app that helps you manage your money.

2. Income is not a static indicator of financial wellness.

Disregarding other demographics, it turns out that the people with the healthiest financial outlook are not those with the highest incomes. Rather, those who planned ahead for large, unplanned expenses were ten times more likely to be in the financially health category. Another key finding from the study was that financially healthy Americans banked online more, and were more likely to utilize mobile banking, like depositing paychecks by taking a picture of the check.

What we can expect to see as a result: More products that help people develop a planned savings habit means more people will reach the threshold of financial health. Sites like and PowerWallet are free, personalized tools that help you see exactly where your money is going, so it’s reasonable to expect banks to roll out similar sites or apps.

3. Financially healthy Americans bank differently than those who are struggling.

Financially healthy Americans are much more likely to use credit cards, which rack up points and rewards. They deposit their paychecks in checking or savings account, instead of cashing them right away. Financially coping Americans are more likely to use debit cards, and struggling Americans primarily use cash.

What we can expect to see as a result: It isn’t likely that banks will suddenly start handing out credit cards to unbanked Americans with bad credit, but hopefully this study will encourage banks to do away with checking and saving account fees. Banks could take advantage of a large, unbanked population whose current obstacle to opening an account is the fees.

“63 percent say once they find a product or service they like, they tend to be very loyal and don’t like to switch,” said Gutman. “It’s a win for consumers and a win for providers: build long term revenue streams while boosting consumer satisfaction.”

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Jess Miller

Jess Miller


Miller is the former assistant editor of



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