Bank On Cities Toolkit

A new NLC toolkit, "Bank On Cities: Connecting Residents to the Financial Mainstream,” provides municipal leaders with a step-by-step guide for launching “Bank On” initiatives that help working families avoid high-cost check cashing and other fringe financial services.

The toolkit draws upon lessons from the Bank On Cities campaign launched in 2008 by the YEF Institute. Through this campaign, the YEF Institute helped 18 cities across the nation replicate the successful Bank On San Francisco program. Both the toolkit and campaign were made possible by support from the Annie E. Casey Foundation and Ford Foundation.

About 100 cities, counties and states are now at some stage of developing Bank On initiatives. Through these efforts, local officials work with financial institutions and community organizations to connect unbanked residents with free or low-cost bank accounts, financial education and other mainstream financial services. The San Francisco program alone now reaches more than 50,000 residents.

Living on the Financial Fringes
According to the FDIC, more than one-quarter of U.S. households rely on alternative financial services such as check cashing, car title loans, payday lending, pawn shop loans, and refund anticipation loans. Of these 30 million households, nine million are completely "unbanked," while 21 million are "underbanked" - they have a bank account but still use costly fringe financial services. More than 70 percent of unbanked households have yearly incomes below $30,000, and more than 54 percent of African American households and 43 percent of Latino households are unbanked or underbanked.

The average unbanked worker spends an estimated $40,000 over his or her lifetime just to cash paychecks. In addition, residents struggling to make ends meet frequently become trapped in a cycle of debt when they turn to short-term, high-interest loans offered at check cashing outlets and other alternative financial service providers. With no safe place to store their money, unbanked residents are prime targets for theft and are at risk of losing their money in the event of a disaster. They are also less likely to build savings and develop a strong credit record.

As demonstrated by the latest recession, financial instability among a large proportion of a city's families has a substantial impact on local economic vitality. Financially insecure residents lack the savings and credit needed to invest in education, start new businesses and achieve sustainable homeownership. On the brink of a financial emergency, these residents are more likely to require public services. Neighborhood safety is also at risk when basic financial transactions are conducted in a predominantly cash economy.

Bank On Programs
A bank account can provide the "on-ramp" to financial stability. Following the model developed by former Mayor Gavin Newsom and Treasurer José Cisneros in San Francisco, city leaders are partnering with banks, credit unions and community organizations to eliminate barriers to the financial mainstream. These barriers may include minimum balance requirements, monthly service charges, past problems with bank accounts such as unpaid overdraft charges, or lack of a U.S. driver's license.

A typical "Bank On" account eliminates or mitigates these obstacles, and connects residents with financial education on budgeting, credit, saving, bank products and avoiding financial traps. As trusted messengers, community organizations reach out to unbanked families who would benefit from safe, affordable financial services. Municipal leaders are in a unique position to convene local partners and spearhead development of the Bank On initiative. Many cities have used their Bank On programs as the foundation for a broader financial stability agenda, partnering with mainstream financial institutions to expand access to prepaid debit cards, low-cost payday loan alternatives, credit repair services, savings options and direct deposit of paychecks and public benefits.

Since 2009, NLC has continued working with cities to build and expand Bank On initiatives. Federal officials are now exploring opportunities to bolster local efforts. In his 2011 budget proposal, President Obama requested $50 million to fund a national Bank On USA initiative to support the development or expansion of local Bank On initiatives.

A New Toolkit for Bank On Cities
NLC's new toolkit offers a practical resource to municipal officials who plan to develop or improve a Bank On initiative. Replete with an array of tools, city examples and sample documents, the toolkit's 11 chapters focus on the essential components of a Bank On program:

  • Partnerships and steering committee structure;
  • Preliminary research;
  • Working groups and subcommittees;
  • Budgeting and resource development;
  • Data tracking and analysis;
  • Product development;
  • Marketing and outreach;
  • Financial education;
  • Training and customer service;
  • Launching and sustaining a Bank On program; and
  • Developing a broader financial stability agenda.

All local officials and community partners can download the toolkit online and are encouraged to visit the Bank On portal website, A limited number of print copies will be available for cities that are planning to initiate or enhance a Bank On program. Please contact Laura Fischer at (202) 626-3056 or for more information and/or a printed copy.
Bank On Cities: Connecting Residents to the Financial Mainstream (PDF)