Building Better Bank Ons by Reid Cramer

Reid Cramer, Director, Asset Development
Program, New America Foundation

In 2005 San Francisco city leaders were surprised by new research that estimated that one in five San Francisco adults-and half of the city's Blacks and Latinos-did not have bank accounts. These primarily working poor city residents faced a big disadvantage because they lacked this basic financial tool. In fact, many unbanked San Francisco residents reported paying 2 to 5 percent of their income just to cash their paychecks.
To address this problem, San Francisco public officials challenged financial institution leaders to join with the City and their non-profit partners to create and launch Bank On San Francisco, a first-in-the-nation effort to bring 10,000 of the City's estimated 50,000 unbanked households into the financial mainstream. City leaders wanted to offer low-income residents alternatives to check-cashing outlets by increasing the supply of starter bank accounts with easy, affordable ways to deposit paychecks, pay bills, and save.

Bank On is now being replicated in more than 70 cities and states nationwide. In 2010, the Obama Administration announced the creation of a national effort to bank the unbanked--Bank On USA.

What have been the successes and failures of the Bank On model? Anne Stuhldreher and Leigh Phillips have been with Bank On since the program's founding and together developed "Building Better Bank Ons: Top 10 Lessons from Bank On San Francisco."  This paper furthers the discussion on what products and services need to be in place to best serve this market, and what roles the various partners at the local, state, and national levels can play to create a truly inclusive financial system.

To read the entire paper, please click here.

Reid Cramer is Director of the Asset Building Program at the New America Foundation, where he leads the program's policy research activities.