An individual or business that relies heavily on cheques and cash as a means of funding instead of bank-related methods – such as credit cards and loans – may be described as ‘underbanked’.

Underbanked people or organisations are those that lack sufficient access to mainstream financial services and products that retail banks typically offer. This may prevent them from taking advantage of such common banking services as credit cards and loans.

What finance sources do the underbanked use?

There is a strong association between underbanked people or businesses and the heavy use of non-traditional forms of finance and micro-finance, such as cheque cashers, pawnbrokers and loan sharks.

Practical Application Example

“ Examples of individuals that are often characterised as underbanked include migrant workers for whom language barriers are likely to be an issue, as well as older adults and others who may feel uncomfortable using cash machines or are unable to access banking facilities due to distance. ”