The ‘Underbanked’ Is The Next Trillion-Dollar Opportunity in Fintech

It’s expensive to participate in the mainstream financial system if you’re poor. Overdraft penalties and banking fees prevent billions of people from accessing the most basic financial tools like savings accounts and lines of credit.

This has created the greatest market opportunity in fintech—low-cost, high-tech financial services for the underbanked, said Angela Strange, a general partner at Andreessen Horowitz, during a panel at the Forbes Under 30 Summit in Detroit on Monday.

“This opportunity [to serve the underbanked] is massive. Depending on which numbers you believe there are anywhere from 2 to 3 billion people worldwide,” said Strange.

Historically, traditional banking institutions have done a bad job serving these customers with an affordable product, which has created two totally separate financial services landscapes in the U.S., said Strange. One landscape includes institutions like Chase, Wells Fargo, Master Card. The other includes payday loan companies and other predatory services that largely service the lower socioeconomic class.

“More than 50% of Americans who live paycheck to paycheck live in this world, and it’s replete with a ton of problems like unpredictable fees,” said Strange. “Until recently there hasn’t been much startup opportunity. The opportunity is now.”

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