When more regulation is good.
21 January 2012
The Consumer Financial Protection Bureau
(CFPB) is going to examine payday lenders and I think this is a good thing for banks. Approximately 60 million adults reside in these households. The FDIC estimates that 9 million household are unbanked. Another 21 million are underbanked, adding to 30 million households or about a quarter of the population. Source: FDIC: http://economicinclusion.gov/key_findings.html
Banks compete against less regulated pay day lenders, check cashing stores, and non-bank financial services companies. Increased regulation will level the playing field and create market opportunities for banks. Most bankers aren't finding many areas for profitable growth and would be well advised to consider this market as a real opportunity. Mobile banking enables the unbanked to access financial services in a low cost channel so that thinner margins can be effectively supported. I would suggest those that are interested to read the Celent report, Reaching Underbanked Consumers Through Mobile Services
which was co-authored by the Center For Financial Services Innovation, http://cfsinnovation.com/
Regulation isn't always a bad thing and the CFPB may create new opportunities for banks that can create appropriate products for the un- and under-banked.