Underbanked

Underbanked describes people who have a bank account but still rely on financial services outside the banking system, such as payday loans, check cashing, money orders, or pawn loans. The FDIC classified about 14% of US households as underbanked in its 2021 survey, roughly three times the fully unbanked share.

Why it matters

The underbanked reveal that an account alone does not equal financial inclusion. Households drift to alternative services because of overdraft fees, holds on deposited checks, thin credit files that block mainstream borrowing, and paychecks that arrive too late for bills, and the alternatives are costly, with payday loans routinely carrying annualized rates near 400%. Pawn lending against gold jewelry is among the oldest such channels and remains enormous, with India's gold loan industry, formalized by firms like Muthoot Finance, extending credit against household metal at scale. Fintech has absorbed some of this demand through early wage access and low-fee accounts, but the underlying cash-flow fragility persists.

In the gold vs bitcoin debate

Both assets serve the underbanked as collateral and savings outside a banking relationship they find expensive or unreliable. Gold's pawn channel is ancient, liquid, and requires no literacy in anything but the metal itself. Bitcoin-backed lending emerged in the 2010s promising the same function digitally, though the 2022 failures of Celsius and BlockFi showed the counterparty risk of intermediated crypto credit. The deeper argument from both camps is identical: people underserved by banks deserve an asset that does not need one.