As far as fintech companies go, PayPal is among the first and most well-known for its online payment platform that offers an alternative option to using debit or credit cards.  The company is now looking to go further by targeting an underserved market: millions of “unbanked” clients (adult consumers unable to have bank accounts due to various reasons), with deposit accounts and debit cards.

This move into traditional banking is nothing new for fintech firms, many of which have already widened their offerings beyond loans (such as SoFi) and investments, by partnering with regional banks.  However, most companies (e.g. Amazon, VenMo, Square) have been targeting the growing millennial segment, who prefer convenience, access, and user experience from online and mobile channels.  PayPal is taking a bold step in using financial  technology to address the tremendous need of the ‘unbanked’ who may not have minimum balances to avoid fees, low income for direct deposit, or live in areas without banks.  Check cashing has come at a high cost for this segment, who now will be able to use their mobile phone to deposit checks to a PayPal account for a smaller 1% fee, and withdraw at ATMs with debit cards - - all without a monthly fee.  Many clients already using PayPal to put cash into their accounts or using existing prepaid debit cards, will be prime candidates for this new offering that should be available by July.  

Overall, PayPal has a chance to really help save some money for the unbanked by taking market share from check cashing stores and payday lenders who have become the only option for many consumers.  After establishing a core banking account, these clients can then move on to budgeting and saving goals which would be another opportunity for the fintech community to address with technology.

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