Unbanked: Why Adults Intentionally Exempt Themselves From the Banking System


What is Unbanked?

The term ‘unbanked’ refers to people, typically adults, excluded from the traditional banking system. These individuals lack access to basic financial services such as credit cards, savings accounts, and other banking facilities.

Essentially, unbanked individuals do not use any banking institution and as a result, they are generally deprived of professional financial services such as insurance and pensions.

While this issue is commonly associated with underdeveloped countries such as the United States and Canada, it’s important to note that several households in developed countries are also unbanked.


For instance, as of 2021, data from the Federal Reserve show that around 13 million adults (approximately 5%) in the U.S. don’t have a bank account. It wasn’t that there were no banks, but most of the affected population were not interested in having one.

In some developing economies such as Nigeria, many of the unbanked population prefers to use the traditional saving method. They save their money in what is locally known as ‘kolo’ made of mortal or furniture.

Why People Are Unbanked

There are several reasons why many adults around the world remain unbanked. This can be summarized as follows:


It has been revealed that some unbanked population struggles to meet the minimum balance requirements set by banks, posing a major obstacle. Many have acknowledged that one primary reason for avoiding bank accounts is the high fees imposed by banks.

Ignorance and Illiteracy

In many underdeveloped societies with a greater number of world-unbanked adults, illiteracy is a major contributing factor, as it takes a level of enlightenment to know how the banking system works as well as its benefits.

However, even in developed countries, there are educated adults in this category who still lack financial literacy and knowledge of banking products.

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It should also be added that many people who belong to the unbanked population usually don’t see the need to plug themselves into the financial services and products that traditional banks provide, since life seems good enough with the methods they have been accustomed to.

Terrible Past Financial Behaviour 

There are people whose past financial behavior got them placed on a no-account list, as they kept getting involved in actions that are considered risky to a bank.

If a person has a history of bounced checks or a penchant for unpaid overdraft fees, they can be blacklisted from opening a new deposit account.

Another angle to this revolves around how some are trying to keep their name and funds away from the banking system because a debt collector is hunting them down to pay what they owe.

Lack Of Trust

Some unbanked have all it takes to be in the banking system (and many of them used to have a bank account before now) but lost trust in banks and simply got unplugged. This of course is a combination of various factors.

Some banks have hurt the feelings of their customers by engaging in negative activities to earn profits, including forcing unneeded products down the throats of their agitated customers. 

In the U.S. some neighborhoods are historically known to have been targeted for predatory lending, and a lot of people around are being super careful. Also, certain immigrants who witnessed some measures of banking crises in their previous societies can lack trust in banks in their new country.

Disadvantages of Being Unbanked

One, an unbanked person won’t be able to get direct deposits from an employer, and will be unable to build a credit history for future borrowing. All around the world, those without a bank account can’t generate the necessary data needed to establish creditworthiness, and the result is that they find it difficult when they need some funds to take care of an emergency.

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Being unbanked also makes life more complicated. An unbanked adult usually must rely on check cashing services to cash paychecks since they don’t have direct deposit. Hence, they have to settle for other financial services that are both more costly and time-consuming.

Relying on cash for everyday expenses can also be risky, because the cash can go missing or stolen, and it becomes difficult to be retrieved. Generally, a bank account gives one access to a safer way of transferring and saving money. 

Benefits of Being Banked


Financial institutions like traditional banks were built to help secure your funds, and it’s thus a better option to keep your money in a bank account than at home. 


When you have a good reputation within the banking system, you won’t easily become prey to discriminatory and predatory lending services which were designed mischievously to exploit the unbanked via very high-interest loans.

As you establish a credit history via your activities within the banking system, you will increase your chances of getting your applications approved for competitive interest rates, whether it’s loans, home purchases, credit cards, etc.

Ease In the Digital World

A banked adult can easily conduct basic financial transactions anywhere they are with a deep sense of freedom and ease. It doesn’t matter what part of the country you are in, you can easily use debit cards for transactions and ATM withdrawals and won’t have to be stranded.

More Opportunities 

You have a lot of opportunities to grow assets within the banking system. You can invest in a federally insured savings vehicle that can gain interest and bring more resources to execute your dreams. Generally, you will be able to save a lot of money that should have been wasted on alternative financial services.

What does the data say about the unbanked population?

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Canada: A survey by the Bank of Canada (2021) revealed that the population of unbanked Canadian adults is only around 2 percent of the total population since around 98% of adults in the country have a bank account as well as a debit card.

United Kingdom: It was reported that 2.1% of adults in the United Kingdom (amounting to some 1.1 million adults) are unbanked.

Germany: In Germany, only 0,02% of the population is unbanked, making the European giants one of the countries with the most banked population in the world. 

Australia: Australia is one of the countries with the lowest number of unbanked adults in the world. According to data from the Reserve Bank of Australia, only 7 percent of Adults in the country are making use of cash for 80 percent or more of their in-person transactions.

Nigeria: Recent data by Enhancing Financial Innovation & Access All (EFInA) revealed that some 26 percent of adults in Nigeria (around 28.8 million adults) remained unbanked.

Switzerland: Only 2 percent of Switzerland’s 8.7 million population (amounting to around 174,000 adults) are unbanked.

Netherlands: Only less than one percent of the population in the Netherlands is unbanked.

Philippines – According to the 2021 Financial Inclusion Survey, the number of unbanked Filipino adults is around 34.3 million adults. 


There are still several people in different parts of the world who are still unbanked even with the level of financial literacy they have.

While there are those whose limitations revolve around ignorance and financial illiteracy, there are many more unbanked people who chose to be so because they don’t trust traditional financial institutions. That is the way to keep creditors or collection agencies away.


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