unbanked

Unbanked is the term used for individuals who do not have access to a bank account or other formal financial services, and who generally conduct most financial transactions outside the regulated banking system. The term is often used alongside underbanked, meaning people who have bank accounts but rely disproportionately on nonbank services such as informal lenders, payday lenders, or cash-intensive methods.

Causes and barriers include lack of essential documentation, the cost and minimum balance requirements of formal accounts, physical distance to branches, limited trust in financial institutions, language and technical literacy barriers, and the prevalence of informal economies. Women, rural residents, migrant workers, and people in low-income groups are frequently disproportionately affected.

Consequences: People without bank accounts face higher costs for daily transactions, greater exposure to cash-related risks, difficulty saving securely, and limited access to formal credit, insurance, or payment systems. They are often more reliant on cash, money orders, and informal credit arrangements, which can carry higher fees and risk of predatory terms.

Geographic patterns and trends: Global estimates from the World Bank's Global Findex database show that hundreds of millions remain unbanked, with higher shares in Sub-Saharan Africa and parts of South Asia. In many countries, mobile money and digital financial services have expanded access, particularly where agent networks and simple onboarding are available, but significant gaps persist, especially in rural areas and among women. Policy responses include low-cost, no/minimum-balance accounts, simplified identification and Know Your Customer processes, digital identity systems, and the expansion of agent networks and interoperable payments.