National League of Cities’

Institute for Youth, Education and

Families

Heidi GoldbergProgram Director, Early Childhood & Family Economic Success

CFED 2010 Assets Learning ConferenceSeptember 23, 2010

Bank On Cities: The National Landscape

National League of Cities’ Institute for Youth, Education, and Families The National League of Cities

(NLC) is the country’s oldest and largest national organization representing the interests of cities.

The Institute for Youth, Education, and Families (YEF Institute) is a special entity within NLC.

The Institute focuses on several issue areas related to strengthening families, including family economic success.

YEF Institute’s Mission:

To help municipal leaders take action on behalf of

children, youth, and families.

Access to Mainstream Financial Services

According to an FDIC study, an estimated 30 million households, or 60 million individuals are un- or underbanked.

The check-cashing industry comprises more than 6,000 outlets, which process more than 180 million checks annually, generating $1.5 billion in fees.

The average unbanked worker spends over $40,000 over a lifetime just to cash their paycheck.

12 million Americans use RAL’s each year at an interest rate of 40% to 700%.

Why cities? Why now?

Family financial stability critical for overall city economic vitality.

Financial services can become a part of larger, community-wide asset-building strategy.

Other benefits: Public safety Disaster preparedness

Foreclosure crisis/economic climate create both a need and an opportunity.

NLC’s Bank On Cities Campaign

Goal: To help city leaders develop and implement initiatives to connect residents to mainstream financial services and products.

Technical assistance project launched in 2008 that works closely with city leaders to develop Bank On initiatives.

Informed by Bank on San Francisco model

Now in year 3: broad-based technical assistance and national convenings to further develop model.

The Bank On Model A Bank On campaign is driven by partnerships

Municipal governments Community-based organizations Financial institutions Regional regulators

Innovative solutions are created to reach un- and under-banked individuals, including: Developing safe, affordable financial products; Creating pathways and supports to assist targeted populations to

utilize these products; and Conducting outreach campaigns to inform the public about these

opportunities.

Developing a Financial Product

Common baseline features: Low or no cost account Low or no minimum monthly balance Forgiveness of at least one set of NSF/OD charges within the first year Flexibility in opening accounts for individuals who have been in ChexSystems Acceptance of alternative forms of ID, such as the Mexican consular ID or an

Individual Taxpayer Identification Number (ITIN) Clear and thorough disclosure in explaining bank products and policies

Additional Features in some Bank On accounts: Free ATM or debit card Free money orders Savings account Free online banking Encouragement of direct deposit Remittance product

Partnerships: Cities and Communities

City roles Mayor or elected official serves as champion Provides staff time, meeting space and other resources Acts as project coordinator and convener of stakeholders Uses bully pulpit to engage financial institutions and community

organizations

Community organization roles: Engage residents through direct outreach and referral Act as a primary service provider or convener for financial education Assist with data tracking

Partnerships: Banks and Regulators

Financial institution roles: Provide insight and expertise into development and provision of

appropriate financial products Participate in outreach and marketing Collect and track data

Regulators’ roles: Provide guidance and advice about key topics

Community Reinvestment Act considerations Risk Assessment Patriot Act or Alternative ID concerns

Offer support with convenings or events Meeting rooms or financial support

Provide research assistance Compile data from financial institutions

The Bank On Landscape

There are now close to 70 Bank On initiatives underway around the U.S. in varying stages of implementation.

A handful of states and regions have initiated larger-scale efforts.

About 25 cities have fully launched initiatives and more will launch soon.

Cities with established Bank On programs

Central Texas Region (Austin)

Dallas, TX Evansville, IN Fresno, CA Gaithersburg, MD Houston, TX Indianapolis, IN Kalamazoo, MI Los Angeles, CA Louisville, KY Manhattan, NY Newark, NJ Oakland, CA

Owensboro, KY Philadelphia, PA Providence, RI Sacramento, CA San Jose, CA Santa Ana, CA San Francisco, CA Savannah, GA Seattle, WA St. Petersburg, FL Washington, DC

Bank On City Successes

Bank On Houston January – December 2009 36,317 new checking accounts Average monthly balance: $883.52 Large increases in financial education take-up

Bank On Seattle 1st Quarter 2009 – 2nd Quarter 2010 35,928 new Bank On checking accounts opened Average quarterly balance for all open checking accounts: $615.70* 543 Bank On savings accounts opened Average quarterly balance for all open savings accounts: $1,291*

(*small subset of financial institutions reporting)

Bank On City Successes

Bank On Indianapolis As of Summer 2010 7,584 new Bank On accounts opened 180 accounts closed 19 financial institution partners with over 230 branches

throughout the city

Bank On St. Petersburg 4th qtr 2009 - 1st qtr 2010, 193 new accounts opened Average monthly balance of $349 Financial education opportunities provided to 242 residents

Common Denominators for Success

Mayor or elected official serves as a champion;

Strong partnerships with community stakeholders;

Involvement of financial institutions from the start;

Importance of developing a data collection strategy in the early stages;

Links to resources and experts (NLC, Federal Reserve, FDIC, other cities); and

Links to other asset-building services in community.

Common Challenges

Data tracking Working with financial institutions to submit data Lack of uniformity within and across programs Lack of common measures

Negotiating with partners about program and product features

Ensuring front-line staff have sufficient training to offer Bank On accounts

Thinking Ahead As Bank On efforts continue to grow, financial

product offerings will become more sophisticated and fine-tuned.

Some programs are breaking new ground with innovative products and services.

National-level entities are considering ways to reliably track and evaluate impacts across local programs.

Stay tuned for Bank On USA…

Resources www.joinbankon.org: an online Bank On portal and

interactive community

NLC’s Bank On Cities Toolkit: a step-by-step guide for city leaders to develop programs (forthcoming)

Contact InformationHeidi Goldberg

Program Director

Early Childhood & Family Economic Success

Phone: 202/626-3069

Email: goldberg@nlc.org

National League of Cities’Institute for Youth, Education, and Families

1301 Pennsylvania Avenue, NWSuite 550

Washington, DC 20004-1763Web: www.nlc.org