Listen: Startup seeks to leverage AI, automation to reach unbanked population

In this episode of “The Buzz,” Bank Automation News speaks to Alok Prasad, CEO of startup CashRepublic, about using automation and artificial intelligence (AI) to help communities of color take advantage of banking services. CashRepublic serves the unbanked currently with check cashing, wire transfers and other services at two Florida locations. It plans to launch an app later this year. A recent FDIC survey showed that 5.4%, or 7.1 million U.S. households, are unbanked, meaning that no one surveyed in the household had a checking or savings account at a bank or credit union. Most of the unbanked are African American or Latino customers, populations that have been disproportionally affected by COVID-19, Prasad said. “We know that the pandemic has impacted these communities of color pretty strongly and you look at all the data whether it's death rate, you know, they tend to be 40% higher than other demographic,” Prasad said. “So, they have been hard hit both from the impact of the COVID, the healthcare inequalities that have been there, and also the financial inequalities.” Prasad contends that automation and AI can help serve the unbanked by lowering the cost of typical banking services. He explains in this podcast how Orlando-based CashRepublic plans to leverage the tech to reach those who feel disenfranchised by banks and credit unions. The Bank Automation News webinar on automation technology for exceptional bank cybersecurity and ID verification takes place on Thursday, Sept. 9, at 11:30 a.m. ET. Register here . Attendees will be able to ask questions via chat. Subscribe to The Buzz Podcast on iTunes , Spotify , or download the episode .

The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Loraine Lawson Good day. I’m Loraine Lawson, deputy editor of Bank Automation News. Welcome to our weekly podcast, the Buzz. This week, I sat down with Alok Prasad, CEO of the fintech CashRepublic. The startups’ mission is to provide banking services to those who otherwise feel disenfranchised by the banking sector. A 2019 FDIC survey showed that 5.4 percent of U.S. households were unbanked, meaning that no one in the household had a checking or savings account at a bank or credit union. This represents approximately 7.1 million U.S. households. Most of the unbanked are living paycheck-to-paycheck, and have been particularly hard-hit by Covid. Prasad believes automation and artificial intelligence, along with other technologies, can help serve the unbanked at a lower cost. He explains how.Why is this a technology versus a problem? technology can help? How can technology help?CEO Alok Prasad So the as you know, this, the segment has not been served by institutions that invest in technology. And consequently, the impact is a very manual process. You take something like check cashing, and evaluation of the chat, you know, it's a manual process, people look at the check the manually evaluated and make decision. And consequently, the cost of cashing a check is very high in the marketplace, right? So the the manual aspect, or lack of the use of technology very explicitly translates into the cost that consumers have to pay to get access to that service.Loraine Lawson Okay, and so you're using technology to reduce that costs? Is that right? How does that work?CEO Alok Prasad So we are using the technology to kind of streamline the overall business, it ranges from, ah, all the way in a retail store where a customer comes in, walks into a store, we have tablets everywhere, they can check in this input their data themselves and we validate that data through connections to you know, one time password or connecting to Google or USPS. We validate validate customer information. So our our customer service representatives don't have to do additional work on that. And then when they bring in the check, we look at the image we are working on solutions, obviously we are early stage GSR for deployment. But we are we are working on using OCR technology to essentially kind of separate out the data so that we can evaluate them. We can analyze them over time, we want to get more sophisticated using visually AI or much more intelligent, processing using Word for documents, to be able to really look at the check historical checks, look at you know, if they are coming from the same maker, you know, do they match up the signatures. So, there's lot one can do using technology that today has been done manually. And consequently, the error rate is high and therefore the losses are high, which drive the prices up, as well as the time and effort taken to actually do the processing, which drives the price up. So we're hitting it on both side by using technology one less work to do manually and two, we have better risk management because we can make more accurate decisions. And the consequence of that is our prices in the marketplace is 1/3 of our competitors When, for example, you know, if your cash a cheque at CashRepublic is under $200, for example, we charge a $1.95, while competitors charge, close to $6Loraine Lawson To cash a check to somebody who's not a customer for them, is that, okay? CEO Alok Prasad yeah. So if somebody walks into a store, let's say, with a payroll check, they want their money instantly, and not have to wait four or five days for the bank to clear the check, we would basically give them the cash for the check. And we have to analyze the check to make sure you know, the check is good, etc. And the person is legitimate. So we do all that using technology to be able to give them the money instantly. Loraine Lawson And you don't have branches, correct? CEO Alok Prasad We do have branches. Loraine Lawson You do have branches? Where are you based? CEO Alok Prasad So we have our flagship location, we launched the first one, a month or so ago in orange blossom train in Orlando, Florida. And we have a second one coming in West toenail drive in a couple of weeks. Loraine Lawson So you're not really an App Player, then. CEO Alok Prasad Yeah. So So we started with the retail, because let me back up and kind of go, Why retail is important to us. And why technology and retail is important. Many of the consumers that we are trying to serve. While they use technology, they have all have mobile devices, they are very emotionally attached to the money for you know, for them, that is the livelihood, that's how they put the food on the table. If they miss, you know, if they don't have the money in hand that day, instantly, it has very severe implications versus, you know, for for the consumers, like you and I, okay, we don't get the money today, I can wait two days, because I have a buffer to take care of these consumers tell. And so while there are great FinTech solutions out there, app-only solutions, the adoption is fairly limited, because they need the money right now. And if anything goes wrong, they don't have a place to turn to. And so while we want to bring them there -- we are launching our app solution later this year -- we want to educate the consumers and handhold them to transition to using the app. So detail is important because they have our consumers go there. That's how they have kind of wired today. But a strategic intent is to drive adoption of a mobile app. So you know, after the first couple of trips, they don't have to actually come back to the same activity, they can actually do it from the comfort of their home or, you know, wherever they are. Loraine Lawson Okay. And, you know, there are a lot of different fintechs out there right now trying to address the unbanked and a lot of different conversations going on around that are other places where you have synergy with other banks or fintechs or? CEO Alok Prasad Yes. So what what we are doing is a few things. Right. So obviously, you know, there's Chime, there's Dave, the number of of the solutions out there. And, and they have done a very good job. I commend them what they've built out. And they're doing extremely well. I think the challenge we see there is most of the consumers that are adopting Chime, are kind of lead, tech savvy users, many of them already have banking relationships with some other banks. And, and they are largely, you know, I hate monolight. But they're largely a debit card offering. They don't have a broad set of solutions that these consumers need to manage their financial lives. So we are different than them because two things. One, we have a broader set of products that we offer to them all over from a check cashing to auto insurance and other insurance that we can need to add as well as we are both digital as well as have replied to be digital, and retail and we will reply to offer similar solutions that chime in even others offer like to daily pay etc for those who do direct deposit so we will be fairly competitive with them. But strategically our differentiator is a tailored set of products and solutions under one umbrella And a choice of retail and digital solution. Loraine Lawson You mentioned that you use or you are planning to use AI? Are there ways in which you're using other automation technologies? CEO Alok Prasad Yeah, if you're looking, you know, again, we are we are we are brand new, we are looking at RPA solutions, to do a lot of the reconciliation work that we do with third parties. So we don't have to do it manually. I talked about OCR to kind of visualize the data from driver's license checks, etc. Look at using the visually I match information. So we get smarter about a check. You know, you know how does a chat written by Disney Company differ from that written by some other company? And how do we quickly make decisions on those kind of checks. So it is very much driven towards faster making, decision making and more real time decision making. So because our customers want the money right now, and we have to underwrite that risk, Loraine Lawson he said COVID has sort of exasperated the situation he talked about that. CEO Alok Prasad Sure. So you know, when you think about, you know, our customers, they think about unbanked and underbanked. And, you know, most of them are African Americans, Latino consumers. And while they are roughly a third of the US population, those in the unbanked and the bank are roughly two thirds, right? So they are disproportionately represented in vanbrugh, unbanked and underbanked. And we know that the pandemic has impacted these communities of color pretty strongly and you look at all the data whether it's death rate, you know, they tend to be 40% higher than other demographic. So, they have been hard hit both from the you know, the impact of the the COVID, the healthcare inequalities that have been there, and also the financial inequalities right. So, for this segment, and which we sir, which are predominantly minorities and people of color, they have been squeezed from multiple angles from COVID, financial inequalities and healthcare inequalities. Loraine Lawson You’ve been listening to the Buzz, aBank Automation News podcast. Thank you for your time and be sure to visit us at BankAutomationNews.com for more automation news. You can also follow us on Twitter and LinkedIn. Please don’t hesitate to rate this podcast on your podcast platform of choice.

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Listen: Startup seeks to leverage AI, automation to reach unbanked population

Over 7 million U.S. households are unbanked

U.S. Bank takes ownership stake in 2 venture capital firms

Africa-focused fintechs raise nearly $700 million this week

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