To understand the market forces that have shaped this industry and the corresponding opportunity, we have only to look at the sweeping changes that have taken place in the financial services industry as a whole, and the banking industry in particular.

Over the last ten years there has been a nationwide consolidation of banks that has resulted in the closing of thousands of branch locations. The net effect of this pervasive change is the loss of financial services to a whole sector of the American population, in particular, the middle and lower income customer. What was once a standard fact of life for the American consumer, his relationship with a local branch bank (with whom he had, in some cases, a life-long connection) now no longer exists. In addition, as has been widely documented over the last decade or two, personal debt ratios have risen to an all-time high. Traditional banks, driven by a different agenda and not focused on the middle and lower income customer with little disposable income, have abandoned this sector of the market. This has left millions of customers across the country without a regular financial service provider to meet their basic needs.

Year after year, statistics from the banking industry have documented the burgeoning “unbanked” population in the U.S. Approximately 20-30% of Americans today do not have a relationship with a traditional bank, credit union, or savings institution. As much as 50% of this group is “unbanked” by choice. This is a stunning statistic that highlights a huge and growing segment of the population whose needs are underserved.

This demand has spawned a dynamic alternative financial services industry, in particular, check cashing and payday loan companies. Industry studies now estimate as many as 13,000 check cashing and payday loan companies are operating in the U.S. cashing approximately $180 million checks annually with an aggregate face value of more than $55 billion. Consumer demand continues to be strong because the focus of these centers is to provide services that meet the needs of the “unbanked” or “underbanked” customer in a way that fits their particular lifestyle.

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