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Could ATMs help attract unbanked or underbanked individuals?

Could ATMs help attract unbanked or underbanked individuals?

New ATMs provide a way for financial institutions to serve unbanked or underbanked consumers. Despite the wide availability of mobile banking technology, nearly 10 million households in the U.S. do not have a bank account, according to U.S. News and World Report, citing 2011 data from the Federal Deposit Insurance Corporation. Another 51 million people are underbanked.

A significant percentage of the unbanked population does not want a bank account, and many others want to sign up with a bank but can't. The reasons for this may be because banking fees are too expensive for people who live paycheck to paycheck or because individuals have previously acquired too many overdraft fees or had a terminated account and are being denied.

Banks can reach underbanked and unbanked customers by expanding ATM offerings
Unbanked individuals sometimes have to pay 4 to 5 percent of a check's value as a charge to cash it, according to Mestrich. Some initiatives have taken aim at making banking more accessible to a wider range of people. Additionally, community banks and credit unions are starting to introduce alternative financial offerings as a means to introduce unbanked customers to more traditional services. Some of these programs have offered ATM-like kiosks in lower-income areas where unbanked individuals can cash checks, and this has led many people to open bank accounts.

As some financial institutions shift much of their focus to mobile banking offerings, there are still many low- and mid-income people who rely on cash. Particularly as unbanked and underbanked individuals face fees from pre-paid cards, some may turn to traditional banking services. . Banks may be able to serve more of these customers through the use of more accessible ATMs. American Banker indicated that people who are not used to a traditional bank setting may feel more comfortable with access to these self-service machines. 

May 7, 2014