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City Strategies for Financial Empowerment

City Strategies for Financial Empowerment. Leigh Phillips City and County of San Francisco. Why Financial Empowerment?. United States has two distinct financial systems: Mainstream = choice, security, upward mobility Fringe = high-cost, predatory, lack of access

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City Strategies for Financial Empowerment

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  1. City Strategies for Financial Empowerment Leigh Phillips City and County of San Francisco

  2. Why Financial Empowerment? • United States has two distinct financial systems: • Mainstream = choice, security, upward mobility • Fringe = high-cost, predatory, lack of access • Financial Empowerment looks at the “other side of the ledger” – increasing income by decreasing expenses and encouraging savings. • Refers to umbrella of programs: banking, tax refunds, financial education, anti-predatory lending, asset building and savings.

  3. Two Unique Programs • Launched the Working Families Credit in 2005 • Local match to the EITC, in 4th year • Over 13,000 families enrolled - now connecting to other benefits services • Bank on San Francisco launched in fall 2006 • Moving the mainstream market to accommodate LMI families through unique coalition • Over 18,500 active accounts to date • Proving LMI families can succeed in the mainstream

  4. The Unbanked in San Francisco Data from the Brookings Institution estimates: • 50,000 San Francisco households are unbanked. • Among African Americans and Latinos, 1 in 2 adults have no checking account. • Check cashers and payday lenders do more than $40 million in business each year in SF alone.

  5. Why Bank on San Francisco? • Without a bank account, families spend hundreds of dollars a year on check cashing fees and money orders. • The unbanked have no safe place to keep their money, and are more likely to be victims of crime. • In the event of a disaster, like a fire or an earthquake, families have no way to access money remotely and savings will be lost. • Studies show that the unbanked are less likely to save and build assets.

  6. What is Bank on San Francisco? • Collaborative effort to bring 20,000 unbanked San Franciscans into the financial mainstream within the two year pilot. • Works collaboratively to “move the marketplace” to offer suitable products and customer support. • Public/Private Partnership • Office of the Treasurer • Federal Reserve Bank of San Francisco • EARN • 17 Financial Institutions (11 banks, 6 credit unions) • Community based organizations

  7. Forming the Coalition • The City convened all San Francisco financial institutions at the Federal Reserve Bank. • Developed program collaboratively to ensure buy-in to goals and objectives. • Created the Bank on SF product through extensive negotiations. • Banks and credit unions must offer the Bank on SF product in order to participate.

  8. The Bank on SF Commitment To participate, financial institutions must: • Offer a low or no cost account. • Require no monthly minimum balance requirement. • Accept the Mexican and Guatemalan Consular ID cards as primary identification. • Have a pathway to a second chance. • Waive one set of NSF/OD fees per client. • Actively partner with community groups to promote the product and provide financial education. • Track accounts and report out on a quarterly basis.

  9. Our Partner Banks and Credit Unions

  10. How are we doing? • Launched outreach campaign with outdoor media, press and community events presence. • 18,500 accounts opened to date. • Average monthly balance is over $700 • Approximately 90% of accounts still in good standing. • Enthusiasm of financial partners remains high. • Interest and support from community is overwhelming.

  11. National Interest • Significant interest from other cities and states across the country • Working with national organizations to develop a replicable/scalable model: • National League of Cities • Clinton Foundation • US Conference of Mayors • AARP

  12. Lessons Learned • Must focus on a collaborative approach; engage natural partners. • Don’t underestimate the influence of local government, both with financial institutions and the public. • Thorough communication and training is essential. • Diversity of the market can be used to benefit everyone. • Don’t make assumptions about what LMI families can do!

  13. What is the role for cities? • Cities deliver services and know their communities • Cities protect people from foul play • Cities deliver beneficial messages • Cities can help people get ahead financially, and a few cities are starting to do so by leveraging • Actual powers (i.e. moratorium on check cashers) • Connections to the community • Strategic relationships with financial institutions • The ability to bring all players to the table • ALL AT SCALE

  14. Cities for Financial Empowerment • Coalition of seven cities working together to further FE work on the municipal level • New York, San Francisco, Chicago, Miami, San Antonio, Savannah, Seattle • Able to learn from each other, pilot new ideas and use collective power • Ability to shape a national agenda around strategies for financial empowerment and serve as a resource for state and federal lawmakers

  15. Contact information Leigh Phillips Program Manager Bank on San Francisco Office of the Treasurer City and County of San Francisco Phone: (415) 554-4320 E-mail: leigh.phillips@sfgov.org

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