• by Jack Loechner , Staff Writer @mp_research, April 27, 2005

A new study by Global Advertising Strategies focuses on unbanked immigrants and ethnic minorities, whose spending on financial products and services will increase by 94 percent in next 4 years. The report indicates that the unbanked are typically immigrants, ethnic minorities, the youth, widows, divorcées without credit histories in their own names, and people who have filed for bankruptcy and are re-building their credit-worthiness. This group of "unbanked" Americans comprises more than 13 percent of the 105 million households in the United States.

Banks, until the last few years, says the report, have for the most part ignored them, leaving them to rely on alternative financial service providers, such as check-cashing outlets, but are now paying attention to the huge opportunity of this new frontier of customers.

Reviewing the 2000 Census data, the report notes that one million immigrants arrive to the United States each year. Hispanic- and Asian-American populations in the United States are projected to grow by 258% and 267% respectively between 1995 and 2050, compared with just 50% for the country as a whole. By 2050, it is expected that Asian- Americans will comprise 9 percent of the total U.S. population, up from 4 percent in 1995.

Growth among Hispanic-Americans is expected to comprise 22 percent of the total population by 2050, up from just 9 percent in 1995. The overall purchasing power of Americans in 2002 was $8 trillion, 20 percent of which was from ethnic minorities. It is estimated that this purchasing power figure will grow to $10 trillion by 2007, with ethnic minorities accounting for 22 percent of the total. 

Common Reasons Why People Are Unbanked

• Avoiding monthly service and overdraft fees
• Minimum balance requirements
• They are already served by money transfer companies, payday lenders, check cashers
• Lack of familiarity with U.S. financial system; suspicion of banking institutions
• Convenience consciousness
• Fear of political and economic instability
• Lack of identification

 Read the complete synopsis.