A new survey by KPMG LLP indicates that U.S. banks are
struggling with slow revenue growth, increasingly are setting their sights on
customers who have only basic bank accounts. About 23% of bankers polled say
so-called underbanked customers present the greatest growth opportunity for
their bank. That is up from 12% a year ago and represents the biggest jump
among any category of customers.
KPMG defines underbanked customers as those who have a basic
checking account but no access to other services, like credit. The data
suggests roughly 10 million, or 8.2%, of U.S. households are unbanked and 24
million, or 20.1% of U.S. households, are underbanked.
KPMG notes that the underbanked segment goes beyond
low-income customers to include high-school and college students or recent
graduates. Banks increasingly are interested in underbanked customers because
they spend more money on fees on things like cashing checks or ATMs than other
The KPMG survey polled 100 executives at banks of various
sizes during the second quarter. Judd Caplain, KPMG’s Advisory Industry Leader
for Banking and Diversified Financials, states banks are getting more creative
in how they should target unbanked and underbanked customers by attempting to
customize product offerings for this segment, and are staffing their branches
to cater to them.
Separately, the KPMG survey shows that expanding the branch
footprint continues to be a goal for many bankers, despite the rise of mobile
banking. Roughly 41% of bankers polled said they plan to increase the number of
physical branch locations over the next 12 to 19 months. The figure goes
hand-in-hand with a renewed focus on the unbanked or underbanked, who may be
less likely to have access to smartphones or computers.
The survey also demonstrates that 32% of bank executives
believe that asset and wealth management, a less capital-intensive areas of
banks’ businesses favored by some banking regulators, will be the top growth
driver for their banks over the next one to three years. Firms like Morgan
Stanley, which has a large wealth-management business, have recently seen their
stocks perform better than banks with big trading and markets businesses.
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