Quick overview of the underbanked fintech market for VC investment.

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