CHICAGO—Underserved consumers paid $103 billion in fees and interest during 2013 on $1.3 trillion in total financial activity, according to a new analysis from the Center for Financial Services Innovation (CFSI).
Of that approximately $20 billion in interest and fees was spent on subprime auto loans.
According to the CFSI, the underserved market has continued to grow, expanding by 7.1% during 2013. It is projecting growth of 4.6% this year, or total revenue of $107 billion. The CFSI used FDIC figures on the estimated size of the underbanked market, which the FDIC said comprises 68 million Americans.
Why the growth? According to the CFSI, several trends are at work, including:
- Cheap and available credit, especially on auto loans and credit cards.
- Short-term credit overtaking single-payment credit.
- Growing maturity in the prepaid market.
- Movement by consumers from retail storefronts to mobile and online channels.
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