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    Expanding Financial Access through Innovative Community Initiatives: Promising Practices from the Bank On Field

    NLC & Treasury Logos

    Recently, our own Bill Myers attended 2 day workshop put on by the National League of Cities and the U.S. Treasury Department to discuss how improved financial services can be delivered to underserved families. This is what he had to say about the event:

    First, Credit Union enthusiasts have to get over that this growing program is called "Bank On." Yes, Credit Unions are welcome. Jose Cisneros, the Treasurer for the City and county of San Francisco (Bank On San Francisco is the first and leading program) said plainly, "I love Credit Unions." Jonathan Mintz. Commissioner of the NYC Department of Consumer Affairs noted, "CUs are always there to count on for Bank On NYC." One of the stark Bank On statistics is that 73% of banks are aware of large underserved markets in their service areas yet only 18% have considered serving these markets.

    Bank On boosts inexpensive, safe financial access for the unbanked through a partnership between government (city or state), local non-profits, banks and credit unions, and the National League of Cities. There are 20 Bank On Programs (4 states, 16 cities).

    The typical Bank On starter product is a low cost checking account without Chexsystem, accepting alternative ID, and waiving one overdraft fee per year. The partners are continually working to improve their basic banking accounts. The latest work uses an FDIC template to set floors and ceilings for products. The Bank On program builds a List of financial institutions that are compliant and encourages their clients to seek out those depositories. The website http://joinbankon.org/ captures many of the best ideas of Bank On.

    I attended a day-and-a-half workshop last month sponsored by the US Treasury Department. I stood in for Lois, presenting basic banking products developed in REAL Solutions. Some of the more innovative products highlighted were prepaid debit cards under development and the Self-Help MicroBranch model in California. Self Help is also piloting REAL Solutions favorites: event based savings (a variation on Holiday Club accounts in which the member identifies goals, sets a time period, and agrees to a regular deposit amount. The share secured loan is also taking on new clothes as a loan that disburses at the end of the term rather than the beginning. I saw another example of Checkless Checking, somewhat similar to the CoVantage product.

    Donna Gambrell, Director of the CDFI Fund reported that her funding next year will be the highest ever, and they are moving from 5 programs now to 12 programs this spring.

    Financial Education was a big topic, with attendees more or less equally divided between those who feel financial education is necessary (if unproven) and those who feel financial education hasn't led to behavior change.

    Three models were presented: Information Models (classroom training), Advice Models (counseling) and Mechanism Models (behavioral approaches, such as choice defaults and in line education). From the Mechanism Model perspective, financial education is an add-on to products, not a standalone class room activity. This might include add-ons as part of car buying, part of high school and college graduation, part of retirement and part of home buying.

    Several speakers appreciated Financial Capability as a improved solution. This expands the focus from education to action and embraces core competencies: developing goals, managing a budget, credit management, financial services tradeoffs, taxes and saving for future.

    Michael Barr, Assistant Secretary for Financial Institutions at the Treasury Department, announced that $50 million of funding for Bank on USA is in the President's budget. This is a great time for REAL Solutions credit unions to partner in this expanding program.

DiscussionLeave a Comment

  1. Hi Bill, Do you know what type of “financal account” is planned for this tax refund pilot program? (Treasury Department Announces New Pilot to Help Deliver Safe, Low-Cost Financial Accounts to the Unbanked and Underbanked During Tax Season. Link:http://www.treas.gov/press/releases/tg843.htm). Do you think it would be a good opportunity for credit unions to provide a similar (or better!) account in conjunction with this program? Beth Troost, Michigan Credit Union League

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