Bank on Initiatives Make Sense

1. Bank on Initiatives Make Sense

2. “Bank on” Background • Bank On-type programs, when correctly implemented, can benefit banks, community groups, government officials, and consumers. • As the Bank On model spreads to new communities, unbanked persons will begin saving money that they're currently spending on fringe financial service providers, and financial institutions will see that this is a market that's profitable to service.

3. Nation Wide Initiatives

4. Who are the unbanked? • Disproportionately low-income individuals and families. • 10% of households nation-wide are unbanked or about 10 million. • Nearly 30% of low to moderate families are unbanked. • Minorities, particularly Blacks and Hispanics. • More than 20% of Blacks and Hispanics are unbanked. • Young adults. • Families headed by adults under age 35 are unbanked. • Previous account holders who closed their account due dissatisfaction with bank services. • Individuals who had their account closed due to challenges with misuse and overdrafts.

5. Why are they unbanked? • Lack of trust in financial institutions. • Lack of knowledge and experience with the mainstream-financial system. • Perceived costs over the benefits. • Perceived lack of availability of appropriate products for low-wealth and low-income customers. • Need for improved outreach to market segment. • Perceived to be an unwelcoming environment. • Bad previous experiences with banks and services • Stuck in a cycle of debt, no savings, and continue to access wealth-stripping services (check cashers, pay-day lenders, etc.).

6. How will the goal be achieved? • Promote and facilitate access to main-stream financial products. • Low-cost or no-cost Checking Accounts • Savings Accounts • Second-Chance Accounts • -For individuals that have had their accounts closed at one time or another for a variety of reasons. • Combat high fees paid out to wealth-stripping pay-day lenders and check cashers. • Credit unions, community banks can offer better choices, a short-term installment loan.

7. Financial Institution • Continual training for their staff to position themselves as financial advisers; • Communicating information about the program to all levels, so that the back office knows that Bank On customers are to be treated differently; • Regularly sending out e-mail or training reminders that keep the program goals on everyone's radar; • Collecting data about Bank On customers so that program results can be measured and analyzed; and • Having a source where they can send customers whose financial track records go beyond the bank's acceptable risk profile (in San Francisco, credit unions and United Way filled this need).

8. Cowlitz County Community Overview Approximately 100,000 residents live in Cowlitz County, which include the cities of Castle Rock, Kalama, Kelso, Longview, and parts of Woodland in the Lower Columbia-Pacific Region of Washington State.  This area was hit hard by an economic recession that followed on the heels of the region's decade-long transition from economic dependence on the logging and fishing industries to lower- paying jobs in the services and travel and tourism industries.  The Cowlitz Asset Building Coalition (CABC) was formed to implement a robust strategy driven to address the overall economic well being of low and moderate income families and individuals.  CABC is meeting this area’s economic development challenges through an array of programs, partnerships, and services designed to build knowledge, access tax credits for eligible individuals, increase competencies in financial literacy, improve credit standing, and assist in building assets.

9. Bank On Cowlitz • The Bank on Cowlitz is designed to increase access to financial main-stream services and financial education for low-to moderate-income residents that will assist them achieve greater economic prosperity. •  Banks, credit unions, public housing, workforce development, financial education, community action agency, consumer credit counseling services, county social welfare services, and community based organizations comprise Bank on Cowlitz’ membership.. • Being one of eight pilot sites selected by the Department of U.S. Treasury’s Office of Financial Education, Community Financial Access Pilot, Bank on Cowlitz receives additional support and technical assistance from the Washington Department of Financial Institutions and the Washington Commerce Department. 

10. Current Results Number of Accounts Opened: Checking 177 Savings 266 Number of Accounts Closed Checking 4 Savings 15 Total amount of opening balance Checking $3,917.00 Savings $2,969.00 Average monthly balance for Checking $287.82 all accounts Savings $97.32

11. Action Plan • Form Subcommittees. • Conducting outreach to other partners and banks. • Beginning development of implementation plan. • Will be conducting assessments of financial education and financial products. • Identifying outreach strategies for engaging the unbanked. • Timelines for implementation geared towards capitalizing the tax season (Earned Income Tax Credit), Philadelphia Saves, and other similar campaings.

12. Financial Institution Commitment • Sign a Letter of Commitment. • Participate in Bank on subcommittee (s). • Provide in-kind support (coordination, promotion, etc.). • When appropriate, assist with engaging other partners. • Promote and refer participants to accounts and financial education. • Track and report performance measures.

13. Referral Card (front)

14. Referral Card (back)

15. How will communities benefit? • The unbanked transition from wealth-stripping services to wealth-building financial products is expanded for residents. • The unbanked residents gain access and means for conducting easier, safer, less expensive daily financial transactions. • The unbanked increase their financial education and access financial mainstream institutions. • The unbanked become banked and move towards achieving economic self-empowerment.