The World Bank estimates that two billion adults don’t have an account at a bank or other financial institution. They are the unbanked; outside the financial system. PwC puts the unmet deposit demand of the un(der)banked at $360 billion.

Greg Rable, CEO of FactorTrust, says the underbanked can be anyone and everyone - people facing a range of everyday circumstances that have placed them outside regular criteria for many traditional lenders. The typical underbanked consumer, according to their data is employed and has a primary banking relationship. The top three employers of these consumers are fast food restaurants, government agencies and – perhaps surprisingly – big banks.

“Each person’s situation is different,” says Greg. “Sure, some are unable to get credit because of a poor previous credit performance but there are also those who are new entrants into the credit market and simply lack a history, as well as divorcees who haven’t previously had credit in their own name. Then there are those who use alternative finance simply because they like the speed and convenience of the service.”

How can forward-thinking companies help close the big gap that exists between the banked and underbanked? Greg cites the essential role of technology in supporting the speed and convenience expected of digital channels.

Robust risk analysis must underpin every lending decision. Three important trends in this area are influencing the industry, according to Greg. “Flexibility, data and collaboration,” he says.

“Flexibility, because companies are realising that the traditional ways of doing things don’t work in every situation – 113 million U.S. adults have credit scores below 700. When we take alternative credit data into account we see that this population deserves credit options, and that it is possible to offer them. Data: this is where the value is. So much data is generated about and by individuals every day and the right technology can capture it and work it to provide something of real value. And collaboration because there are so many specialisms now that couldn’t have been envisaged ten, fifteen, twenty years ago. They might not exist within the four company walls of many traditional lenders but companies that have found their niche become experts in what they do.”

The plight of consumers and businesses that can’t get credit and struggle to gain access to financial services highlights the gap between the banked and the un(der)banked. Innovations in credit risk analytics can be instrumental in reaching these customers who may have struggled to secure funding in the past and help close this gap.