When your community bank is building outreach to underbanked communities, there are a few important factors to keep in mind. You already know that many underbanked populations experience a cultural and linguistic divide that is keeping them separate from the fast-paced digital culture, and that reaching out through community organisations is more effective than approaching people on the street or even online banner ads.
But what many community financial institutions don’t consider are the mistakes to avoid. There are several easy-to-make mistakes that can discourage your underbanked populations from making or maintaining accounts, and you may not even realise that these hurdles are there. So today, we’re here to encourage all bank outreach programs to stop and consider if you are making (or are about to make) one of these critical mistakes with your underbanked customers:
1. Device Assumptions
First and foremost, never assume you know what type of device your customers will be connecting with. While “modern consumers” from pre-teens to retired professionals “all have smartphones”, you can’t assume that your underbanked population will be the same. Many do have smartphones, but not necessarily from the major manufacturers or running the common OS. Off-brand phones are often more affordable and provide the same emergency functionality as high-priced brand name phones.
There are also many people who don’t have a smartphone, or only have a laptop for work, or have a phone but it’s so low-cost that it still has a physical number pad.
This means that you can’t assume a customer will be able to access your mobile app or use high-end features like fingerprint or retina scanning. If your system errors out without a phone or these high-end phone features, you’re going to lose many of your underbanked accounts almost immediately.
2. Overdraft Fees
For populations that are cautious about banking in general, overdraft fees are the ultimate enemy. The last thing a person transitioning from mattress-banking to online banking wants is to realise they’ve accidentally overspent and now face a crippling overdraft fee. This is a quick way to receive angry phone calls and quickly cancelled accounts.
While account fees are a necessary part of banking, be forgiving with your new underbanked account holders. Don’t charge overdraft fees until the month rolls over (give them time to deposit money or refute false charges) and keep those fees to a minimum to avoid a fear or outrage response.
Gatekeeping is any software barrier that stops an account holder from accessing and managing their account. Security codes through email or text are examples of necessary gatekeeping, but you should minimise any that is unnecessary. If it takes half an hour to log in the first time, many of your underbanked new account holders will quit on the spot.
If it requires using two or three devices and alternate accounts to log in, underbanked account holders may not even be able to access their accounts at all. Be very aware of how many steps are necessary to create, access, or re-authenticate an account. Be aware of what is required to change or reset a password.
If the user experience path seems like it will intimidate or even fully block your underbanked customers, it’s time to make some changes.
4. Debt Traps
Underbanked populations often avoid banking because they’re worried about accidentally overspending or misunderstanding a financial offer. These fears are legitimate, especially for immigrants or isolated cultural enclaves who genuinely may not understand how lending or credit work.
To this end, try to avoid anything that might act as a ‘debt trap’ for your new underbanked account holders. Don’t offer credit limits that are too large to start with, and don’t offer loans without a great deal of consultation and guidance before authorising. This way, your newly banked customers can ease into the financial world and learn how to handle digital money at a slow and safe pace.
5. Overly Complex Apps
Finally, make sure your mobile and online banking portals are not too complex to navigate. Especially for ESL (English as a Second Language) customers, an app that is too complex can keep account holders from successfully managing their accounts.
Make sure that viewing balance, transactions, and payments is incredibly simple from the starting dashboard, and that disputing charges is a 3-tap process or shorter. Make sure your customers can easily find the help pages and contact support without sifting through layers of drop-down menus, and that live chat is a readily available form of assistance.
Outreach to underbanked populations is a smart move for any local financial institution, both to increase your customer base and help these populations adapt to the modern banking environment. However, the outreach process doesn’t stop once accounts are opened. If you want your underbanked new customers to enthusiastically adopt online banking, it’s important that your apps be accessible, simple, and safe to use for everyday finances. Check your web and mobile portals to ensure that the features or UI are not turning away your most inexperienced customers.
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