blog

CheckSpring: From usury to banking

By Mike Ma: I've been a little light on the bloggable inspiration recently until I came across Crain's today. It profiled a company called CheckSpring. It is aiming to service "unbanked" clients in the South Bronx by offering check cashing services to low income neighborhoods while trying to convert them to a bank account.

But this is a for profit ... "We're capitalists," expalins founder Charlie Wilcox. I think this is a huge opportunity where people can make money AND make the world a better place.

Now these companies have their critics and doubters, but two thoughts came to my mind ...

What happens if this market starts accumulating wealth? Who would be the asset manager who would try to serve them first? I am guessing a large scale player who could handle such small accounts or someone who would be philosophically aligned with this market segment. I will leave the names for you to fill out.

What would be the implication of combining this with a "21st Century Homestead Act," idea #7 on HBR's 20 Breakthrough Ideas for 2006 (subscription required), where each newborn could receive $6,000 as a downpayment on a productive life. What if they do this, where would most people turn who are born in low income neighborhoods ... I'd guess CheckSpring, if successful, would be up there. While I don't think that this is going to happen anytime soon, it does indicate that there is an undercurrent of support in re-establishing the middle class through public or private enterprises.

While many financial services firms feel like they are "slumming it" by looking all the way down the food chain to the mass affulent (for shame!), I think it'd behoove more people in financial services to look at further "downstream" as well. I'd argue they were looking ahead, not down.

I think we will see more CheckSprings, er, springing up soon. Banks first, but who's next?