ROI Doesn’t Matter

When does an opportunity become an obligation? This is the urgent question facing the banking industry regarding serving the unbanked and underbanked U.S. population -the roughly 56 million people who do not have traditional bank accounts or rely on traditional financial services relationships.

Hurricane Katrina has put this question at the top of banks' priority lists. Before the hurricane hit, the unbanked population was a $1 billion market segment to be analyzed and (potentially) targeted with the appropriate products. Now, providing financial services to the people displaced by Katrina literally is a matter of life and death.

At least this horrible catastrophe has put faces on the people in the unbanked/underbanked segment, forcing banks and other businesses to look beyond the statistics and credit scores. We cannot avoid the fact that unbanked Americans mostly are poor, less-educated minorities. Their financial "portfolios" tend to be their homes and physical possessions. They often live paycheck to paycheck, lack any kind of insurance and have no safety net (financial or otherwise) should disasters (of any kind - weather, health, etc.) strike.

Now, we - our country, our society, our industry - are facing a grim reality: There are hundreds of thousands of people who need financial help quickly - without heed to the usual business metrics of return on investment, cost/benefit, channel profitability or customer retention.

The challenge will be providing the right tools and resources to the people who need them - and by "right," I mean reliable, dependable and useful. However, the types of financial services and related tools that fit into that category will be a moving target - 24-7 call centers, stored-value cards, online access, kiosks and other mobile banking services, for example.

The related challenge will be to deploy these services, technologies and tools, not with an eye to long-term feasibility, ROI, etc., but rather, because people need help and it is the right thing to do. There will be plenty of time to analyze costs and benefits, reach out to potential customers, or focus on product potential and emerging markets. For now, the unbanked and underbanked victims of Hurricane Katrina are simply people who need help, not an untapped market segment or demographic.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio