After a phased rollout, Regions Bank (NYSE: RF) now touts financial services — prepaid cards, check-cashing and Western Union services — to unbanked and underbanked customers throughout its 16-state footprint.

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“Since introducing Regions Now Banking last fall the response has been very positive and we are proud to be the only large bank offering all of these services under one roof,” said John Owen, head of consumer services for Regions Financial, in prepared remarks.

The Birmingham, Ala.-based bank began testing these services in July and started integrating them into its branches in September.

“Regions, like many banks, has finally realized that there is a huge market of working Americans with no banking relationships or minimal banking relationships,” said Jim Wells, president of Wellspring Consulting, a firm with a mission to expand financial services to the unbanked and underbanked.

Called “Regions Now Banking”, the product suite consists of a Visa prepaid card that charges a $5 monthly fee (waived with $500 monthly direct deposit) and a $3 load fee (free via direct deposit). Prepaid card customers get free access to Regions Bank ATMs and online banking.

Additionally, non-customers can cash all checks with Regions Bank — a fee may be incurred, depending on the amount and type of check. For example, cashing a Regions check for $10 or less will incur no charge, but cashing any money order will result in a 5% fee ($3 minimum).

Finally, Regions Bank will offer Western Union bill payment and money transfer services through branches.

Banking on non-bank products, services

According to the Federal Reserve, there are 30 million U.S. households that are unbanked or underbanked.

“Contrary to the popular misconception that these folks have no money and no choices, Regions found that the so-called unbanked and under-banked collectively move a lot of money around and are comfortable using non-bank financial service providers,” said Wells.

Regions, the 12th-largest U.S. bank, opted to partner with Chexar, a company focused on prepaid and check-cashing technology and solutions, to develop products and services that appealed to customers, not to banks, Wells noted.

The new direction taken by Regions plays into the increase of prepaid cards in the financial industry. From tax refund prepaid cards to Suze Orman’s new Approved card, more U.S. consumers are coming into contact with non-bank financial products and services. Walmart, the largest retailer in the U.S., has stepped into this market with a wide assortment of financial services that are very similar to those offered by Regions.

The rise of prepaid cards may provide a new way for banks to pad their profits.

“I believe most banks will spend a fair amount of time criticizing Regions for what they are doing. Then many will try to emulate the practices. Few will succeed though unless they change their attitudes towards beginning a customer relationship by doing what the customer wants first,” said Wells.

For a look at how banks can, and should, adopt a similar program, check out this modest proposal on how to save the banking industry.)

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