The document discusses the large and growing underbanked market in the US, where about 1 in 4 Americans lack access to traditional banking services. This population has significant unmet needs that financial technology (FinTech) companies could address, such as affordable credit options and convenient funds transfer. One such company, PayPerks, aims to help prepaid card users avoid fees and incentivize spending through a weekly lottery program. The document analyzes the opportunities for FinTech ventures to better serve the major underbanked demographic.

1. Underbanked
FinTech
The Next VC Investment Focus
Marshall Yang, 2013

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. 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. 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. Case Study – PayPerks, an Early Stage
Company to Watch

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. 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. 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