There is an evolving space in the US financial services space for the "unbanked". These are different ethnic groups, with less trust in typical banks, or simply poor people who don't feel there needs are represented by banks.

globeandmail.com : The name of the game

The full-service financial service machines that TIO makes (think ATMs 2.0) are placed convenience stores or other high-traffic areas. They allow users to replenish credits on pre-paid store cards, dispense cash, send money orders, transfer money, pay bills and cash cheques.The TIO machines have found a ready clientele among many Americans, particularly those who Mr. Shahbazi says do not trust banks and would prefer to have their cash in hand.

TIO from Vancouver provides hybrid ATM's and connectivity to financial services.

Originally a developer of software aimed at developing kiosk services for other clients, TIO grew into a bill payment, cash acceptor company that provided customers the freedom to conduct a multitude of financial transactions without using a bank."We were looking for an application that would drive value to that delivery vehicle, and we found bill payment and financial services. We've now have become so good at that, acquiring billers, we have direct connectivity with over 15 major U.S. billers that have more than 100 million accounts, between all of them," explained company chairman and CEO Hamed Shahbazi.

TIO seem to be predominantly focussed on the SW Hispanic community.

"You go to your uncle when you need advice, he won't steer you wrong.
That's why we call it the TIO Network. We're not just targeting the Hispanic community. We have a lot of other customers, but what does Sirius mean? What does Interac mean? What does Star mean? We just thought that TIO was a cool sounding name.""The banking environment in Mexico is very different," said Mr. Shahbazi. "Banks are really for rich people. A lot of Mexicans felt mistreated by financial institutions."

Typically, the machines are located in convenience stores. TIO has established partnerships with several national convenience chains like Circle K and ExxonMobil.

The company also has deals with companies such as Cingular Wireless, Speedway SuperAmerica, Cricket Communications, COX Communications, Memphis Light Gas and Water (MLGW) and Qwest Communications to allow real-time bill payment for customers.

And TIO understands their customers, although I would say anyone would want this feature.

"They have this $100 utility bill to pay, and they know that if they pay it through someone that's not real time, it will take 3-5 business days for that payment to post. And with us it posts instantaneously. That means they can hold on to their money for that much longer."

Finally, some useful reflections on the Canadian market space.

Mr. Shahbazi says that Canada's love affair with the debit card limits TIO's prospects in this country in the short term.

"[Canada is] a highly-banked country, with 36 million debit cards for an adult population of 24 million and that sort of stuff, but we still have a cash-based economy here as well. That's why you are going to see these things up here with cash acceptance," said Mr. Shahbazi. "The only reason we are not focusing on Canada at this particular time with the hybrid product is because it is a smaller market, the time with certainly come.

"In Canada, banks have worked well to establish debit as the principal method of cash transactions," Mr. Shahbazi explained.

"Canada has the most successful debit program in the world. That's something that would be difficult to break into. In a way it benefits everybody, there's an ubiquitous ability to enable payment for all Canadians. But we are saying that it is still a cash-based society."

It certainly appears that way in the States, and in a way, Mr. Shahbazi doesn't have to focus on Canada at the time being.

Relevance to Bankwatch:
North America: There are divergent banking spaces (unbanked) evolving in the US, that don't apply to the same extent in Canada.

PS … apologies for promoting yet another 2.0!  😉
Technorati Tags: unbanked, banking_strategy, ATM_2.0