This paper summarizes the findings of research in Bogota, Colombia and Mexico City on the use of financial services by the urban population. The focus is on the majority of persons who have no relation whatever with a formal bank, cooperative or credit union. The paper identifies the characteristics of those who are "unbanked" and the range of reasons for their exclusion. It also discusses the multiple and considerable costs that this exclusion imposes on the unbanked population, as well as the loss in income that results for formal sector financial institutions. The paper concludes by describing some measures taken to extend financial services to the low-income population, and proposes the importance of linking "financial inclusion" to programmes of urban development and upgrading focused on the poor in developing countries.