Underbanked
FinTech
The Next VC Investment Focus
Marshall Yang, 2013
The Underbanked Market is Large
• The Underbanked – people who get rejected for credit
cards, checking accounts, auto/home...
The Underbanked Market is
Growing
• 2009 Recession and slow recovery drives the growth:
‐ Declined credit score
‐ Dropping...
Many Unmet Needs for FinTech to
Satisfy
• Consumers
‐ Access to affordable credit
‐ Convenient and fast transfer and remit...
Case Study – PayPerks, an Early Stage
Company to Watch
1/4/2004 1/4/2005 1/4/2006 1/4/2007 1/4/2008 1/4/2009 1/4/2010 1/4/2011 1/4/2012 1/4/2013
Web Search interest: "prepaid ca...
PayPerks Incentivizes Spending and
Helps Prepaid Card Users Avoid Fees
• Prepaid card issuers provide PayPerks as value-ad...
MarshallYang,2013
•The underbanked market is big and growing
•Many inefficiencies to improve using FinTech
•PayPerks solve...
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Underbanked

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Quick overview of the underbanked fintech market for VC investment.

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Underbanked

  1. 1. Underbanked FinTech The Next VC Investment Focus Marshall Yang, 2013
  2. 2. The Underbanked Market is Large • The Underbanked – people who get rejected for credit cards, checking accounts, auto/home lonans, etc, because they have low or absent credit scores or low incomes. • One in four Americans are underbanked • $78 Billion of financial services are delivered to them each year
  3. 3. The Underbanked Market is Growing • 2009 Recession and slow recovery drives the growth: ‐ Declined credit score ‐ Dropping out of workforce and into welfare ‐ Job instability
  4. 4. Many Unmet Needs for FinTech to Satisfy • Consumers ‐ Access to affordable credit ‐ Convenient and fast transfer and remittance ‐ Take cash from/to electronic accounts • Banks and Institutions ‐ Sales and marketing to the underbanked, without the help of credit score ‐ Customer loyalty from the underbanked
  5. 5. Case Study – PayPerks, an Early Stage Company to Watch
  6. 6. 1/4/2004 1/4/2005 1/4/2006 1/4/2007 1/4/2008 1/4/2009 1/4/2010 1/4/2011 1/4/2012 1/4/2013 Web Search interest: "prepaid card". United States, 2004 - present The Underbanked are Using Prepaid Cards, but Suffer from Fees • 30% of consumers have been reducing cash usage because: ‐ Employers and Social Security prefer distributing funds via payment cards over mailing checks ‐ Online purchase, large transfers and remittances have to be electronic • Prepaid cards give electronic options to the underbanked, but are expensive and lack customer loyalty
  7. 7. PayPerks Incentivizes Spending and Helps Prepaid Card Users Avoid Fees • Prepaid card issuers provide PayPerks as value-add service to customers • Customers get points by spending and avoiding fees • With these points, customers enter weekly lottery for cash-prize – the underbanked prefer win-big-or-nothing to the traditional 1% cash-back rewards
  8. 8. MarshallYang,2013 •The underbanked market is big and growing •Many inefficiencies to improve using FinTech •PayPerks solves the problem of prepaid card loyalty Sources: http://www.cfsinnovation.com/content/financial-technology-trends-underbanked-market Google Trends 2011 Underbanked Market Sizing Study, CFSI/Core Innovation Capital, November 2012

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