The Underbanked in Australia: Challenges and Solutions for 2026

The term ‘underbanked’ describes people who have a basic relationship with a bank—such as a transaction account—but rely on alternative financial providers for other needs. These alternatives might include payday lenders, pawnshops, or buy now, pay later (BNPL) platforms, often because mainstream banking products are inaccessible, unaffordable, or unsuitable for their circumstances.

Groups commonly affected include:

• Gig workers and casual employees: Those with irregular incomes may find it difficult to meet traditional credit assessment criteria.
• New migrants: Without an established credit history in Australia, accessing loans or credit cards can be challenging.
• Remote and Indigenous communities: Bank branch closures and limited digital infrastructure can make everyday banking difficult.
• Young Australians: Many prefer digital wallets and mobile-first banking, but not all banks have adapted quickly to these preferences.

The underbanked are not a small minority. Many Australians face barriers to mainstream financial services, and this number has grown in recent years due to economic and technological changes.

Several factors are contributing to the rise of the underbanked in Australia:

Branch Closures and Reduced Physical Access

Major banks have continued to close branches, especially in rural and regional areas. This trend leaves some communities reliant on online banking or services like Australia Post’s Bank@Post, which may not offer the full range of banking options.

Cost-of-Living Pressures

Rising costs for essentials such as rent, food, and utilities are pushing more Australians to the financial edge. In these circumstances, some people turn to short-term lenders or BNPL schemes for immediate relief, even though these options can carry higher fees and risks of debt cycles.

Digital Exclusion

While digital banking and fintech apps are becoming more widespread, not everyone can access or use them easily. Older Australians, people with disabilities, and those living in areas with limited internet connectivity may find it difficult to use digital banking services.

Stricter Lending Criteria

In response to regulatory changes and a focus on responsible lending, banks have tightened their credit assessment processes. This can make it harder for people with non-traditional incomes—such as gig workers or casual employees—to qualify for loans or overdrafts.

These challenges mean that underbanked Australians are more likely to pay higher fees, experience financial stress, and have limited opportunities to save or build a positive credit history.

Despite these challenges, there are promising developments aimed at improving financial inclusion for the underbanked in 2026.

Digital-First Banking Solutions

A growing number of digital banks and fintech companies are offering low-fee, mobile-first accounts with features like real-time notifications and budgeting tools. These products are designed to be more accessible, especially for younger and tech-savvy users who may not feel well-served by traditional banks.

Alternative Credit Assessment

Some fintechs are using alternative data—such as rent payments, utility bills, and open banking information—to assess creditworthiness. This approach can help people with limited or no traditional credit history, such as new migrants or gig workers, access loans and other financial products.

Government and Community Initiatives

Government programs are supporting digital literacy and regional connectivity, aiming to reduce digital exclusion. There is also ongoing policy work to review the regulation of products like BNPL, with the goal of protecting vulnerable consumers from harmful practices.

Community organisations, credit unions, and not-for-profits are stepping in to offer tailored financial products and financial counselling, particularly for groups who may be overlooked by mainstream banks.

Culturally Appropriate and Local Solutions

Some initiatives focus on providing financial education and savings programs tailored to the needs of Indigenous and remote communities. These programs often combine matched savings incentives with practical support, helping families build emergency funds and improve financial resilience.

Ensuring that all Australians have access to affordable, appropriate, and safe financial services is about more than fairness. Financial inclusion supports economic resilience, allowing individuals to better manage shocks, invest in education or housing, and participate fully in society.

As Australia continues to move towards a cashless, digital-first economy, the risk is that those who are underbanked will fall further behind. Bridging this gap is not just a matter of social responsibility—it also strengthens the broader economy by unlocking the potential of millions and reducing the social costs associated with financial exclusion.

If you or someone you know is struggling to access suitable financial services, there are resources and support available. Community banks, credit unions, and not-for-profit organisations can offer alternatives to mainstream banking, and financial counselling services can provide guidance tailored to your situation.

The landscape is changing, and with continued innovation and support, financial inclusion in Australia can improve—ensuring everyone has the opportunity to participate fully in the financial system.