One key way banks can remain relevant in today’s economy is to reach and retain new, younger customers. This is no small challenge, as evidenced by the latest statistics from the FDIC.

The FDIC’s just published 2011 National Survey of Unbanked and Underbanked Households reveals that young adults are far less inclined to use banks than their parents. Well over a third of the unbanked (37.3%) and 28.7% of the underbanked are under the age of 34, according to the FDIC report. In fact, the under 34 demographic make up just 18.6% of fully-banked Americans.

Separately, Javelin Research and Strategies reports that regardless of income one in six members of Generation Y have deliberately chosen to use prepaid cards instead of opening a checking account at a financial institution.

Gen Y consumers, having grown up with the Internet place a high premium on speed and convenience. And most financial institutions, with their clumsy branch networks and account opening procedures, stingy hours and funds availability rules, and hefty account balance requirements just don’t fit the bill. Reloadable prepaid debit cards, especially when packaged with innovative technologies like mobile deposit are a more natural fit.

Certainly, the proliferation of prepaid debit card offerings from alternative financial services (AFS) providers could be viewed by banks and credit unions as a competitive threat. But there are also ample opportunities for financial institutions to ride this wave of changing consumer attitudes and to capture mind- and wallet-share, especially with Gen Y.

Unbanked and underbanked Americans paid out $45 billion in fees to cash checks, load funds onto prepaid cards and for other basic financial services in 2010, according to the Center for Financial Services Innovation (CFSI). Reloadable prepaid debit and payroll cards have made especially notable gains – with adoption increases of 33% and 25% respectively between 2009 and 2010, CFSI said.

By integrating prepaid debit with other financial services offerings – such as check cashing, bill payment and money orders – and leveraging the convenience of 24/7 accessibility via mobile and other channels, leading AFS providers are redefining the way tens of millions of Americans bank.

Financial institutions have the opportunity to broaden their appeal with this new generation of clientele. According to several surveys most consumers still view banks and credit unions as the trusted provider of choice for just about every type of financial service, from budgeting to bill payments.

And most banks and credit unions already have or can readily access the low-cost infrastructure requirements, including extensive ATM networks, mobile and remote deposit capture technologies. The key for financial institutions to remain relevant in particular with this new customer is to offer products and services that deliver convenience, liquidity and value.

At Cachet Financial Solutions we’ve enabled a variety of financial organizations – including check cashers, prepaid card issuers, financial institutions and processors – to implement innovative mobile deposit solutions and backend support systems that drive better, more profitable customer engagements. We believe the opportunities in this space are significant for banks and credit unions, and we stand ready to support all our partners as they ride the waves of change that are reshaping the banking experience for a new generation of clients.