What does it mean to be underbanked Meaning and Definition

Pronunciation

/ʌndərˈbæŋkt/ 🔊

Part of Speech

Phrase

Definition

A term used to describe individuals or communities that have limited or no access to traditional banking services, such as checking and savings accounts, credit, and other financial products.

Examples

• The community was underbanked, making it difficult for residents to access basic financial services.
• Many low-income households are underbanked, relying on alternative financial services.

Synonyms

• Unbanked
• Financially excluded

Antonyms

• Banked
• Financially included

Additional Information

Being underbanked can have significant consequences for individuals and communities, including limited access to credit, higher fees for financial services, and increased vulnerability to financial shocks. According to a 2020 report by the Federal Deposit Insurance Corporation (FDIC), approximately 8.4 million households in the United States were underbanked, with many more individuals relying on alternative financial services. This can lead to a range of negative outcomes, including financial instability and decreased economic mobility. Efforts to improve financial inclusion, such as expanding banking services to underserved communities and promoting financial education, are critical to addressing the issue of underbanking.

The term “underbanked” is often used interchangeably with “unbanked,” although some researchers make a distinction between the two. While unbanked individuals may not have any bank accounts, underbanked individuals may have some limited access to banking services, but still rely heavily on alternative financial services. Understanding the nuances of these terms is essential for developing effective policies and programs to address financial exclusion.

The issue of underbanking is not unique to the United States. Many countries around the world struggle with high rates of financial exclusion, particularly in low-income and rural communities. In response, governments, non-profits, and private sector organizations are working together to develop innovative solutions, such as mobile banking and financial education programs, to expand access to financial services and promote financial inclusion.

Eymology

The term “underbanked” is a relatively recent development, emerging in the early 2000s as concerns about financial exclusion and access to banking services grew. The term is derived from the idea that certain individuals or communities are not fully “banked,” or integrated into the traditional banking system.

Usage Notes

When using the term “underbanked,” it is essential to be clear about the specific context and population being referred to. For example, underbanked individuals may have some limited access to banking services, while underbanked communities may lack access to banking services altogether.

Cultural References

The term “underbanked” has appeared in various media outlets, including news articles and documentaries, as well as in academic and policy reports. It is often used to describe the experiences of low-income and marginalized communities.

Idiomatic Expressions or Phrases

• “Financially vulnerable populations are often underbanked, lacking access to traditional banking services.”
• “The community was underbanked, relying heavily on alternative financial services.”

Related Words or Phrases

• Unbanked
• Financially excluded
• Financial inclusion

Collocations

• Underbanked individuals
• Underbanked communities
• Underbanked populations

Frequency of Use

The term “underbanked” has gained increasing attention in recent years, particularly in the context of financial inclusion and access to banking services. According to Google Trends, the term has seen a steady increase in usage since 2010.

Common Misspellings

• Under-banked
• Under banked
• Under-banking