Convenience Stores: Fintech Centres for Unbanked and Underbanked Communities

Many Americans take the convenience of online purchases and financial transactions for granted, but for around 100 million individuals categorised as "unbanked", "underbanked", or "underserved", such privileges remain out of reach, according to current estimates. This demographic, largely comprising low-income earners, immigrants, and those with limited access to credit, faces barriers to managing routine financial affairs, exacerbated by the fallout from COVID-19 disruptions.

However, financial exclusion isn't solely a matter of income; systemic issues within traditional banking systems also contribute to this divide. A recent survey by the FDIC uncovered various reasons why unbanked individuals abstain from having a checking or savings account, ranging from financial constraints and distrust in banks to concerns over privacy and inaccessible branches.

Consequently, many find themselves relegated to what's termed the "second-tier cash economy", unable to leverage the benefits of online transactions, secure the best deals, or even access relevant products and services. This financial marginalisation perpetuates income and wealth disparities, hindering full participation in the national economy.

Fortunately, the emergence of fintech solutions offers a glimmer of hope, bridging the gap for marginalised consumers by providing access to relevant financial services through mobile apps and other digital platforms. Yet, internet access remains a barrier for many, and even among smartphone users, a lingering distrust of technology perpetuates reliance on cash.

In an unexpected turn, local convenience stores and bodegas are emerging as potential champions for the unbanked and underbanked. These neighbourhood fixtures, deeply embedded in their communities, offer unparalleled accessibility to millions of consumers. A study conducted in the Bronx revealed that a majority of consumers frequent these stores due to their proximity, fostering a sense of trust and familiarity absent in larger chain outlets.

Traditionally, these stores have provided essential financial services such as money transfers, bill payments, and check cashing. Now, they are poised to evolve into true financial hubs, expanding their offerings to include a broader range of products and services, capitalising on the trust they've garnered over time.

This shift towards offering financial services in convenience stores is empowering store clerks to become de-facto fintech experts, facilitating the adoption of various payment options, from debit cards to digital wallets. Additionally, these stores are facilitating access to newer financial instruments, such as transit fare payment cards and cryptocurrency transactions, empowering underbanked individuals with cost-effective ways to send money globally.

The evolution of convenience stores into financial service providers is not only expanding choice and financial freedom for underserved communities but also contributing to the broader economy's inclusivity. It's a movement worth supporting, as it aids in lifting individuals the economic ladder and fostering a more equitable financial landscape.