Cash Forward Blog

Why Nearly 50 Million Adults in the US Remain Underbanked

July 1, 2020

Banking is not the same industry it was 50 years ago. What was once considered a staple of the economy has since caused many Americans to lose trust and faith in its effectiveness. With the advent and rapid advancement of the digital age, banks are starting to lose touch with their consumers and have failed to convince many people that they even need a bank in the first place. While policymakers point to the fact that the overall number has decreased slightly over the last few years, it still remains a pressing issue that is only hurting the growth and expansion of the lower and middle classes.

There are two types of people who struggle with access to proper banking:


The underbanked are those who are considered to not have access to critical services that help them stay afloat in times of stress. These services include lines of credit and loans and cause underbanked individuals to resort to payday loans and money orders. These are the ones who really suffer from rigid and non-conforming legacy banking practices.


The unbanked are those who just do not have a bank account. These people struggle financially and are unable to secure bank account due to either account minimums, monthly fees, or poor credit.

These two categories of people make up tens of millions of Americans.

So what is causing so many people to stay unbanked?

According to a study, 50% of people state that they just don’t have enough money to keep a bank account in the green. While this may not be banks faults per se, more than 30% of people state that they just don’t trust their money in the hands of big banks. And why should they? Wells Fargo and other big players have recently been victims of scandal and are known to charge overzealous fees to customers despite millions in profit.

A large number of policymakers are beginning to understand that greater financial inclusion for all means greater economic growth and more financial stability for poor sectors of the country. Our government has begun to implement financial inclusion strategies to help curb the growing problem, but have taken a different approach than other countries have.

Other countries, such as Mexico have recently been pushing for digital banking methods to help their citizens gain easier and more sustainable access to banking. This helps to minimize the monopolization of the banking industry that broods malpractice and scandals among corporate giants, and also helps to stimulate new small businesses and the growth of tech companies to check the power of big banks.

Our country has made goals but has placed less emphasis on new digital tools and more on trying to make the existing banks work better for customers. We all know capitalism better than that - as we have seen young and hungry new tech companies start to step in and show the world a more modern and user-friendly approach to banking.

The New Players: Neobanks and Smarter Money Options for Businesses

Neobank platforms have shown people how modern and frictionless a bank can really be. While many people still want access to a brick and mortar storefront in order to have ATM access and real people to talk to, these digital banks are starting to offer these services and more. Digital chatlines and chatbots, free ATM withdrawals at participating locations, and even cash deposits at new deposit-friendly ATM’s give people top-notch customer service without any fees or red tape. Along with advanced financial planning and automatic savings account generation, these new banks are putting up a solid fight against the big guys.

Other players, such as Clip, are offering similarly creative and modern solutions but for small businesses and retail stores. They are offering a digital kiosk that allows both customers and business owners to deposit cash into their bank while also letting business owners perform daily round-ups of cash and change that they collect. In addition, it also offers bill pay and instant money transfer services to anyone, anywhere. The Clip kiosk can dramatically reduce overhead on money management for small businesses while also helping to increase foot traffic (link to other article on this topic) in stores due to its utility for the everyday consumer as well.

Paired with a Neobank service, Clip can help give those without a bank every service that a legacy banks offer, including access to cash deposit services, bill pay, and money transfers, either from their phone or at participating local retailers.

Where Are We Headed?

Smarter digital banking solutions are the future, and banks know this. This is why they have invested nearly 4 trillion into their digital services and R&D sectors over the last 4 years. Allowing people banking access over their smartphones with no fees and financial planning assistance is the most direct way to help give people access to banking services. It will help our society continue to reduce the number of people who are not using any type of banking service and provide a safety net for those who are taken advantage of by big banks.

The advancement and ever-growing capabilities of digital banking options are promising for those who are struggling to maintain bank accounts or do not have access in their communities. As these banks and their utility continue to spread, anyone in the world with a smartphone will have convenient and easy access to top tier banking services.

Share this article

Clip Register

The fastest, easiest way to deposit cash. Anytime. Anywhere.