Subprime auto financing is one of the main drivers of why American consumers spent $103 billion in fees and interest revenue in 2013, according to the fourth annual Financially Underserved Market Size Study orchestrated by the Center for Financial Services Innovation (CFSI) and Core Innovation Capital.

Study authors arrived at the figure by reviewing $1.3 trillion in financial activity volume.

The study identified five key trends driving the growth of 26 different products used by orchestrators classified as “underserved” Americans to borrow, spend, save and plan in 2013, including GPR prepaid cards, installment loans and checking accounts.

1. Cheap and available credit drive growth in subprime auto and credit cards.

Officials indicated falling subprime rates and pent up consumer demand through the recession have driven strong growth in subprime auto loans and leases, although they believe buy-here, pay-here growth has remained relatively even. At the same time, the growing availability of subprime credit cards has increased consumer uptake and should continue to grow, the study said.

2. Short-term credit overtakes single-payment credit

The study noted regulatory rulings concerning single-payment credit products — loans in which payment is due in one lump sum — slowed growth for this category, while short-term credit, which functions on an installment basis, continued to thrive.

For this reason, officials determined 2013 was the first year in which short-term credit products generated more revenue than single-payment credit products. Short-term credit grew by 11.2 percent in 2013 while single-payment credit grew only 1.5 percent and is expected to decline next year, according to officials

3. Prepaid market shows hints of maturity

Study findings noted the growth of prepaid card revenue is brisk, but shows signs of tapering as the market becomes more saturated.

Officials projected future growth may be bolstered by the segment’s increasing appeal to non-traditional undeserved consumers. At the same time, they added government benefits prepaid cards grew in volume, due in part to new rules dictating dispersal on cards, but declined in overall revenue as fees fell significantly.

4. Economic recovery impacts specific products

The study mentioned products aligned with the recent recession declined, while those associated with economic recovery continued to grow.

Officials pointed out this development includes decreases in dollars spent on Retirement Plan Leakage Fees and Government Benefit Prepaid Cards, as well as increases in the use of Refund Anticipation Checks (RAC) by tax filers and growth in the volume of remittance payments despite declining fees.

5. Consumers migrate from storefront services to online and mobile channels

Driven by broader functionality and real-time access for consumers plus greater efficiencies and data collection for providers, the study said online and mobile channels continue to erode storefront business.

The Federal Reserve estimated that 34 percent of underbanked consumers used mobile banking in 2013.

Findings indicated a continually growing marketplace that expanded 7.1 percent during 2013. Study authors contend this level demonstrates significant market opportunities for financial institutions and investors that aim to develop high-quality, affordable solutions to address the financial health of underserved consumers.

The market is projected to grow by 4.6 percent from 2013 to 2014, reaching total revenue of $107 billion.

The report — which benefitted from the financial support and strategic input of Morgan Stanley and financial support from the Ford Foundation — is not intended as a commentary on the appropriateness, safety, or quality of any specific product, according to Jennifer Tescher, president and chief executive officer of CFSI

“The underserved comprise a diverse and growing market,” Tescher said. “Our goal with this study is to help financial services providers better understand and identify the complex financial needs of this marketplace as they launch safe, affordable, high-quality financial products and services to improve consumer financial health.”

At a minimum, the U.S. market includes 68 million adults who lack a bank account and use alternative financial services, such as check cashing or payday loans, according to the FDIC’s estimate from the National Survey of Unbanked and Underbanked.

Regulators added the underserved market also encompasses people with poor credit, thin or no credit files, and those challenged by low-to-moderate incomes and income volatility.

“Visionary financial services entrepreneurs seeking to build disruptive new businesses have more than one trillion reasons to empower these economically vulnerable Americans,” said Core Innovation Capital founder and managing partner Arjan Schütte.

“This customer is increasingly savvy and looking for mobile and online solutions that responsibly address their needs,” Schütte continued. “At the same time, a number of B2B opportunities exist to replace existing infrastructure and build high-growth businesses helping serve the underbanked.”

This year’s study included new products increasingly utilized by the underserved, including vehicle leases, student loans, government benefit prepaid cards, and borrowing from retirement savings. Previous years’ results were adjusted to maintain the integrity of year-over-year growth statistics.

“The growth of this market makes a strong case for the financial services industry and entrepreneurs to take note of the wide and diverse set of opportunities to provide high quality products relevant to the financially underserved,” said Audrey Choi, head of global sustainable finance at Morgan Stanley.