U.S consumers who are disenchanted with banks will increasingly turn to non-traditional financial services to solve their credit and economic woes, says market research firm Packaged Facts. The U.S. non-traditional financial services market, which includes prepaid cards, check cashing and international wire transfers, will be worth US$389 billion by 2011, it predicts.
Packaged Facts says consumers who have suffered financial problems due to job losses, mortgage foreclosures or poor credit history are not inclined to think favorably of banks. They therefore represent a huge potential market for non-traditional financial services providers.
Funds loaded on U.S. prepaid cards will rise from US$29.3 billion in 2007 to $200 billion in 2011, Packaged Facts says. During the same period, the value of wire transfers from the U.S. to Latin America will rise from US$51 billion to US$98 billion.
Funds borrowed from peer-to-peer online lending exchanges, a new type of non-bank financial service, will rise from US$100 million in 2007 to US$2.4 billion in 2011, Packaged Facts says. But sales of older types of non-traditional financial services such as check-cashing, money orders and payday loans will decline over the next few years.
The U.S. non-traditional financial services market serves 28 million unbanked consumers, 44.7 million underbanked individuals, and 11 million unbanked illegal immigrants, Packaged Facts estimates. Collectively, these individuals earn US$1.1 trillion in annual income and spend US$12.6 billion on non-bank financial transactions annually.
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