NEW YORK -- (BUSINESS WIRE) -- Today, the Center for Financial Services Innovation (CFSI) and Core Innovation Capital (Core) released their third annual Financially Underserved Market Size Study. The new data reveals that revenue from interest and fees paid by financially underserved consumers rose 8% to $89 billion in 2012 from the previous year.
The findings demonstrate the range of continued opportunities for those seeking to develop high-quality, affordable products to meet the needs of these consumers. CFSI and Core Innovation Capital expect market growth to have continued at a steady rate of 8% in 2013.
The report, which benefitted from strategic input and financial support from Morgan Stanley, examined 23 financial products used by over 68 million financially underserved consumers in the United States. The fees and interest figure was generated by an overall market volume of $792 billion in principal loaned, funds transacted, deposits held, and other financial services provided.
“In a tough economy, consumers are seeking financial products that meet their needs to borrow, spend, save, and plan for the future, but the quality of these products varies widely,” said Rob Levy, Director of Research, CFSI. “This report shows a market that is significant and growing, a market that demands high-quality products, and a market that is ripe for innovation.”
In addition to showing growth across the market, the report offers insights at the financial product level. Short-term credit products, which collectively brought in $50 billion in revenue, showed the strongest growth at 9.9% in 2012 compared to 2011. Among the individual product sectors that demonstrated the strongest growth in 2012 were payroll cards, GPR prepaid cards, and subprime auto loans, which grew 32.7%, 28.5%, and 23.6%, respectively.
“These consumers represent a new Emerging Middle Class that is growing in both size and confidence – giving entrepreneurs and financial service providers an unprecedented opportunity to make a difference and build a high growth business,” said Arjan Schütte, founder and managing partner of Core Innovation Capital. “In particular, new mobile and data technologies are taking root in the auto subprime lending space and should continue to drive innovation on behalf of consumers.”
"This report sheds light on the infrastructure developing to meet the needs of financially underserved individuals and how this space is evolving, particularly with tech innovations," said Audrey Choi, Managing Director and Head of Morgan Stanley Global Sustainable Finance. "There is a large-scale opportunity to increase access to new, quality financial services and to help more individuals and families achieve stronger financial health."
For more information or to download the research report, visit http://www.cfsinnovation.com/content/2012-financially-underserved-market-sizing-study.
The Center for Financial Services Innovation (CFSI) is the nation’s leading authority on financial services for underserved consumers. Through insights gained by producing original research; promoting cross-sector collaboration; advising organizations and companies by offering specialized consulting services; shaping public policy; and investing in nonprofit organizations and start-ups, CFSI delivers a deeply interconnected suite of services benefiting underserved consumers. Since 2004, CFSI has worked with leaders and innovators in the business, government and nonprofit sectors to transform the financial services landscape. For more on CFSI, go to www.cfsinnovation.com and follow on Twitter at @CFSInnovation.
About Core Innovation Capital:
Core Innovation Capital is a leading investor in financial technologies serving the Emerging Middle Class, the 80 million Americans that generate over $1 trillion in annual income and spend more than $78 billion in fees and interest on financial services. Core partners with proven entrepreneurs and invests in disruptive financial technologies that measurably improve the lives of the Emerging Middle Class. The Core Impact Alignment investment thesis leverages social impact to create above-market financial return. For more information about Core Innovation Capital, visit www.corevc.com or follow @CoreEMC.
About Morgan Stanley:
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43 countries. Since 2006, Morgan Stanley has committed more than $7.8 billion to strengthen underserved communities. For further information about Morgan Stanley, please visit http://www.morganstanley.com.