In September 2006, a diverse coalition of San Franciscans launched a first-in-the-nation effort to bank the unbanked. City leaders, including the Mayor and City Treasurer, non-profit organizations, the Federal Reserve Bank of San Francisco and 15 banks and credit unions joined forces to bring 10,000 unbanked or underbanked households into the financial mainstream. The results were remarkable. Not only did Bank On San Francisco exceed its own ambitious goals, it started a national movement. At the start of 2011, fully implemented “Bank On” Initiatives existed in 32 cities, 4 states and 2 regions, with close to 100 programs recently launched or pending.
In 2008, the National League of Cities began supporting “Bank On” initiatives around the country, providing technical assistance and a national platform for programs to share experiences. Although the initiative has bipartisan appeal and appears straightforward, organizers must navigate many moving parts. More established campaigns have invaluable lessons to share with emerging ones, and it is in this spirit that the National League of Cities has published the tool-kit, Bank On Cities: Connecting Residents to the Financial Mainstream, a step-by-step guide for municipal leaders, community organizers, financial institutions and others who wish to get involved to develop successful “Bank On” programs in their communities.
Outlined below are 7 core components identified as keys to building a better Bank-On highlighted in the “Bank On” tool-kit and in New America Foundation’s report, Building Better Bank Ons:
- Engage the Mayor and/or other prominent local officials to champion and raise awareness around the issue and bring financial institutions to the table.
- Bring key stakeholders to the table early in the planning stages.
- Create strong partnerships among all players (Community organizations, financial institutions, city government, etc.) and have partners collaboratively design the initiative. Financial institutions must be engaged early on in developing an account that they can sustainably offer and which meets the needs of unbanked individuals.
- Identify a data collection and tracking strategy early on and provide recommendations to financial institutions on how to best code and track customers. The ability to measure impact is vital to continued involvement of partners and funding.
- Establish successful partnerships with financial institutions through clear policies, regular communication with staff at all levels of the institutions and through regular financial institution staff training requirements.
- Don’t “reinvent the wheel” – Do use the resources and expertise available (National League of Cities, the FDIC, the Federal Reserve and other cities, just to name a few).
- Incorporate the initiative into a larger community asset-building agenda to help families achieve long term financial security.
Here in Texas, several “Bank On” Initiatives have taken hold, including Bryan-College Station, Houston, Dallas and Central Texas; however, Texas still has a significant percentage of unbanked households. An estimated 1,040,000 Texas households are unbanked and a further 2.1 million are considered to be “underbanked,” meaning that these households have at least one account but often rely on alternative financial products. These alternative products can cost individuals and households hundreds, if not thousands, of dollars every year. Texas has the fourth highest percentage of unbanked citizens in the country, coming in at 11.5 percent, versus the national average of 7.7 percent. Certain Texas households are disproportionately unbanked, including African-American (19.9%) and Hispanic (20.9%) and those making annual incomes of less than $15,000 (32.5%).1
Being “banked” is an important step to financial security for individuals, providing a vehicle to increase income and savings and begin the journey to building assets, all primary goals of OpportunityTexas. We are committed to increasing financial stability for the un- and underbanked including through our leadership of Texas Saves, an emerging platform to raise awareness about the importance of saving and link new Texas savers with savings information and products.
1FDIC National Survey of Unbanked and Underbanked Households, December 2009, http://www.economicinclusion.gov/