Five Cities Selected for NLC Project to Expand Financial Access Through Bank On Program

July 25, 2012

by Laura McComas

Five cities will receive technical assistance and $5,000 mini-grants from NLC's Institute for Youth, Education and Families to support and improve the collection of data on residents' access to mainstream financial services. Out of a pool of 11 applicants for this project, NLC selected Houston; Louisville, Ky.; San Francisco; Savannah, Ga.; and Seattle.

Each of the cities has partnered with financial institutions and community organizations to launch "Bank On" initiatives that connect residents with free or low-cost transactional bank accounts, which are considered a key stepping stone on the pathway toward family financial stability.

The "Improving Data Collection in Municipal Bank On Initiatives" project, supported by the Ford Foundation, will help these cities overcome barriers to collecting data necessary to evaluate the progress of their Bank On programs.

The Data Deficit

Approximately 60 million Americans do not have bank accounts, or have an account but still rely on high-cost check cashers, payday loan outlets and other fringe financial services. These individuals collectively lose about $11 billion each year from their paychecks to alternative financial service providers, jeopardizing their financial stability and the economic vitality of the communities in which they live.

Since 2008, NLC's Bank On Cities Campaign has helped municipal leaders respond to the needs of financially underserved residents by replicating the innovative Bank On San Francisco model in their cities. The model combines access to low-cost bank accounts with financial education and other asset-building opportunities. As of last April, 32 cities, four states and two regions had fully implemented Bank On initiatives, and many other cities are currently developing new Bank On programs.

These programs have helped tens of thousands of unbanked residents enter the financial mainstream. In its first two years of operation, Bank On Seattle-King County alone opened 24,580 accounts that in early 2010 had an average balance of $400 for checking accounts and $1,200 for savings accounts.

However, cities with Bank On initiatives face an array of challenges in gathering consistent and reliable data on program participants.

Common obstacles include legal restrictions on the type of data financial institutions can collect; lack of compatibility between banks' existing electronic tracking systems and the introduction of the new Bank On account; high staff turnover at bank branches and the need for continuous training; and difficulty in determining a customer's previous banking status.

Because the Bank On field remains relatively new, this NLC project will seek to enhance cities' capacity to understand the reach and long-term impact of their Bank On programs. Each city has proposed sophisticated new strategies to collect the data needed to assess their programs' impact and to identify best practices for expanding financial access.
The City of Houston, for example, plans to develop a mobile app that can be used to track the financial behavior of Bank On customers. All cities selected for this project will work more closely with the financial institutions that participate in their Bank On programs.

Details: To learn more, contact Laura McComas at (202) 626-3056 or mccomas@nlc.org. To download NLC's new toolkit, "Bank On Cities: Connecting Residents to the Financial Mainstream," visit www.nlc.org/iyef.