
US ventures aimed at helping the unbanked are taking cues from developing world - hotgoldminer
http://www.theguardian.com/sustainable-business/2015/oct/23/unbanked-m-pesa-kenya-vodafone-vouch-oportun
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Someone1234
They should look at the UK instead.

"Basic bank accounts" were a game changer. They're what the US calls "checking
accounts" (minus the checks) with them you get a debit card, the ability to
pay in, take out, and transfer money; however absolutely zero ability to go
overdrawn (no loan, no line of credit, etc).

But everyone could get one, even those who declared bankruptcy, since it was
decided that it was not-viable in the 2000s for someone, anyone, to not own or
have the ability to own a bank account. Which is right.

Banks make money via the spread between the general interest rate and the
lower interest rate offered by the account, in addition to sales opportunities
(e.g. offering to upgrade to a full account, savings accounts, small loans,
etc).

However in general in the US banks are under-regulated and antiquated. Banking
in the US Vs. UK feels like going back in time twenty years, everything is
slow, complex, expensive, they charge for a basic checking/current account(!),
you still have to physically go to a branch [ever!], transferring money
between two banks is annoying, checks still exist, their anti-fraud is
pathetic, and they're only getting C&P right now.

PS - Although I am at Wells Fargo so maybe my opinion about US banks is really
more Wells Fargo biased than general banking. Maybe there are better US banks,
but I don't know who they are.

~~~
sksk
I did not know about the basic bank account in the UK. What do you need to
apply for a bank account? Do you need to provide some form of govt. ID to get
it or can you get it any piece of item in a retail store?

In the US a good portion of the unbanked also happens to be undocumented
immigrants. There is also the problem of AML/KYC process in the US which has
been stricter in the US than in the UK (as you could tell from the UK
headquartered banks getting fined by US Regulators -- not saying it is better
though) and as a consequence the cost of compliance goes up for the bank. They
pass on these costs to the consumer but with an upsell mentality that you had
mentioned (increased min balance requirement removes fees, for e.g.) -- this
leads to the upper middle class paying nothing and the poor and middle class
paying bulk of the fees.

The economist had a very nice article about the cost of being poor:
[http://www.economist.com/news/united-states/21663262-why-
low...](http://www.economist.com/news/united-states/21663262-why-low-income-
americans-often-have-pay-more-its-expensive-be-poor). This is a very difficult
problem and will be hard to address properly without adequate support from the
govt. For example, the govt. could provide easier access to banking license
for those who want to serve low-income customers and allow for innovative
solutions in this space.

~~~
Someone1234
> What do you need to apply for a bank account? Do you need to provide some
> form of govt. ID to get it or can you get it any piece of item in a retail
> store?

In order to stop money laundering and fraud they do require some things:

\- Proof of address (2x of the following): Bills (e.g. utilities), council tax
bill, benefits agencies, a UK driving license, tenancy agreement, or a letter
from your employer.

\- Proof of identification (1x of the following): Passport, driving license
(even foreign), national identity card, letter from benefits agency or local
authority, or a verification letter from an individual in an trusted position
(these are verified, and only individuals in certain notable roles are
trusted, like commanding officers in the military, parole officers, and your
priest, etc).

~~~
sksk
Interesting. If they accept foreign passports, it will be amazing if we can
relax the regulation in the US along the same lines with a specific carve out
that information cannot be used to enforce immigration policy violations. Then
most undocumented works can probably get a bank account without a SSN and not
worry they will get deported -- convincing undocumented immigrants that this
is safe is going to a tough battle though.

~~~
foldr
You can open a U.S. bank account with a foreign passport and no SSN already.

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utnick
I have some experience in this area. From what I've seen any company involved
with lending to the underbanked is going to operate pretty similarly to a
payday loan company... A lot of these new companies want to appear different
and go out of their way to never mention payday lending. But the terms are
pretty similar at the end of the day.

Lending to this segment of the population is fraught with write-offs, its just
not possible to give a great deal on loans with that kind of risk unless you
are a non-profit. If it were possible, one of the payday lenders would do it
and corner the market.

~~~
mafribe
For many unbanked, getting loans might not always be the highest priority.
Just a safe place to park one's money is valuable. Imagine you are sleeping
rough on the streets, where do you store your few monetary possessions? If you
keep them on your body, they are likely to get stolen. A basic bank account as
Someone1234 describes it, would help.

~~~
utnick
Totally, I agree, I think someone1234 is describing a UK law that provides
these basic bank accounts to everyone. I think the underbanked will be helped
more through laws and regulations like that than by a new company or
something.

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roma1n
Compte-Nickel, a French operation, has a basic package available that includes
a debit card, IBAN number (to receive or wire funds) for 20 euros/year. No
other fees since there is no possibility of being overdraft. Payments are
free, although ATM withdrawals are paid (something like 2 euros/withdrawal).
It can be bought from tobacconist's stores and refilled there. An ID is
required but nothing else (so it is available to homeless people). Overall
seems like an interesting, non-preying offer.

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thrownaway2424
The article doesn't address one of the primary issues of the "unbanked" in the
US: black people don't trust white people with their money.

~~~
benten10
Don't know if you'll be checking this after probably being downvoted out of
existence but:

Would you have something apart from 'personal experience' to back your claims?
It's an interesting issue: a cultural mistrust of financial institutions to
take care of money, and is bound to have generated much research if there is
any truth to it. If this is the case (as it may well be, I don't understand
the downvotes, perhaps your generalization of 'black people'/'white people'
instead of pointing out cultural issues at play?), social (non-economic)
solutions are likely to be more effective than strictly
financial/technological ones. As in, how east Africa has gotten people to put
complete faith in mobile banking, but South Asia has failed completely.
Perhaps lessons from here could be useful for South Asia?

