"Unbanked" getting served by retail outlets ... not banks

In 2006, I posted an article about how traditional financial services institutions were fighting Wal-Mart's attempt to set up a loan corporation to provide banking services to its customers (Wal-Mart says 1 in 5 of its customers don't have a bank account).

I mentioned that rather than complain and protest, other banks should follow suit and continuously offer products to meet their new customers' needs.

Unfortunately, banks -- especially community and regional ones -- continue to do a poor job marketing to and serving the needs of minorities in a culturally-relevant manner.

Now comes an article from the Washington Post about how other retailers including K-Mart and Best Buy have entered this $320 billion market. This is good news for unbanked and underbanked consumers as competition will inevitably lead to lower costs and fees for services like check cashing and wire transfers.

As the article says, a government survey showed that many unbanked consumers think that they don't make enough money to warrant a bank account, they simply don't trust banks or come from cash-based cultures.

Inevitably, I imagine many traditional banks will disregard this article and claim it's not affecting them because it's not the segment of the market they desire. True to an extent. However, it is impossible to upsell or cross-sell other banking services to a non-customer. Moreover, when they do open accounts, this cash-based segment typically opens accounts with high initial balances. This represents much-needed capitol for banks that need the cash for balancing their books, making loans and keeping investors happy.