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Bank On Everyone is Welcome

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  1. Bank OnEveryone is Welcome

  2. Consequences of Unbanked • $8 billion in fees to alternative servicers • (includes pay day loan fees) • Average charge for cashing paycheck-$40 • ($1000-$2000 annually for check cashing services) • Low wage worker who never utilized mainstream financial services over 40 year full time work history would spend $40,000 on check cashing services • If the $40,000 had been regularly invested in savings bonds, would have $360,000 at retirement!

  3. Why is all of this important to us? • According to Consumer Federation of America, a low wage worker (or anyone utilizing pay day loan services) that has a $500 SAVINGS ACCOUNT with a Bank or Credit Union is EIGHT TIMES less likely to utilize a pay day loan or cash advance service

  4. What are the consequences of these statistics to low wage workers? • Aren’t always aware of the benefits available to them • Are vulnerable to predatory lenders and alternative financial services: • The “unbanked” pay 1-10% of salary for check cashing services • “Pay day” loans cost workers 50 to 400% interest • Paid tax preparation can cost 25%+ of total refund • Unable to accumulate assets through savings without relationship with a financial institution

  5. National proportions of unbanked and underbanked households • An estimated 7.7 percent of households, about 9 mm with at least 17 mm adults, are unbanked • An estimated 17.9 percent of households, about 21 mm with about 43 mm adults, are underbanked • Taken together, at least 25.6 percent of U.S. households, close to 30 mm households with about 60 mm adults, are unbanked or underbanked FDIC National Survey of Unbanked and Underbanked Households

  6. Unbanked householdsby region and state FDIC National Survey of Unbanked and Underbanked Households

  7. Alabama • 11.6% of all households in Alabama (an estimated 222,000 households) are unbanked. • 24.0% of households with an annual income of $30,000 or less are unbanked • 25.7% of Black households are unbanked • 20.2% of all households (an estimated 386,000 households) are underbanked. In addition, 5.7% of households (an estimated 109,000 households) may be underbanked, but their use of alternative financial services is unknown. • 27.4% of households with an annual income of $30,000 or less are underbanked • 39.7% of Black households are underbanked FDIC National Survey of Unbanked and Underbanked Households

  8. Birmingham MSA • 10.1% of all households in the Birmingham-Hoover, AL MSA (an estimated 52,000 households) are unbanked. • 17.9% of all households (an estimated 93,000 households) are underbanked. In addition, 8.8% of households (an estimated 46,000 households) may be underbanked, but their use of alternative financial services is unknown. • FDIC National Survey of Unbanked and Underbanked Households

  9. Florida • 7.0% of all households in Florida (an estimated 527,000 households) are unbanked. • 18.2% of households with an annual income of $30,000 or less are unbanked • 24.2% of Black, 8.5% of Hispanic and 6.0% of other minority households are unbanked • 16.8% of all households (an estimated 1,270,000 households) are underbanked. In addition, 4.8% of households (an estimated 364,000 households) may be underbanked, but their use of alternative financial services is unknown. • 21.7% of households with an annual income of $30,000 or less are underbanked • 27.1% of Black, 20.4% of Hispanic and 12.7% of other minority households are underbanked FDIC National Survey of Unbanked and Underbanked Households

  10. TAMPA-ST. PETERSBURG-CLEARWATER, MSA • 4.7% of all households in the Tampa-St. Petersburg-Clearwater, FL MSA (an estimated 55,000 households) are unbanked. • 3.3% of households with an annual income of $15-30,000 are unbanked • 19.0% of all households (an estimated 223,000 households) are underbanked. In addition, 4.1% of households (an estimated 48,000 households) may be underbanked, but their use of alternative financial services is unknown. • 19.7% of households with an annual income of $15-30,000 are underbanked. • FDIC National Survey of Unbanked and Underbanked Households

  11. MIAMI-FORT LAUDERDALE-MIAMI BEACHMSA • 8.4% of all households in the Miami-Fort Lauderdale-Miami Beach, FL MSA (an estimated 186,000 households) are unbanked. • 20.7% of households with an annual income of $30,000 or less are unbanked • 24.1% of Black and 8.4% of Hispanic households are unbanked • 13.0% of all households (an estimated 286,000 households) are underbanked. In addition, 6.7% of households (an estimated 147,000 households) may be underbanked, but their use of alternative financial services is unknown. • 15.9% of households with an annual income of $30,000 or less are underbanked • 16.1% of Black and 15.6% of Hispanic households are underbanked FDIC National Survey of Unbanked and Underbanked Households

  12. Orlando MSA • 7.6% of all households in the Orlando, FL MSA (an estimated 65,000 households) are unbanked. • 18.3% of all households (an estimated 155,000 households) are underbanked. In addition, 6.2% of households (an estimated 53,000 households) may be underbanked, but their use of alternative financial services is unknown. • FDIC National Survey of Unbanked and Underbanked Households

  13. JACKSONVILLE MSA • 4.6% of all households in the Jacksonville, FL MSA (an estimated 28,000 households) are unbanked. • 23.6% of all households (an estimated 145,000 households) are underbanked. In addition, 4.1% of households (an estimated 25,000 households) may be underbanked, but their use of alternative financial services is unknown. • FDIC National Survey of Unbanked and Underbanked Households

  14. Characteristics of Unbanked • Households more likely to be unbanked than the population as a whole are those: • With a black, Hispanic non-black, or American Indian/Alaskan householder • Where Spanish is the only language spoken at home • With a householder that is a foreign-born noncitizen • That are family households with an unmarried female or male family householder • Earning less than $30,000 • With a householder holding less than a high school degree • With a householder under age 45 FDIC National Survey of Unbanked and Underbanked Households

  15. 37.0 Do not have enough money 33.4 30.5 Cost 27.5 25.0 Do not want account 26.2 11.5 Culture/Comfort 10.5 10.9 Convenience 8.7 Unbanked within 10.9 Do not write enough checks 12.4 the last year 7.3 Unbanked more Could not manage account 6.8 than a year ago 5.0 Inadequate services 5.6 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Percentage of Previously Banked Households Reasons previously banked households are unbanked FDIC National Survey of Unbanked and Underbanked Households

  16. Unbanked households’reasons for wanting to open an account FDIC National Survey of Unbanked and Underbanked Households

  17. Unbanked households’likelihood of opening account FDIC National Survey of Unbanked and Underbanked Households

  18. Characteristics of underbanked households Households more likely to be underbanked than the population as a whole are those: • With a black, American Indian/Alaskan, or Hispanic non-black householder • That are family households with an unmarried female or male householder • Earning up to $50,000 • With a householder holding less than a college degree • With a householder under age 55 FDIC National Survey of Unbanked and Underbanked Households

  19. Underbanked households use of alternative financial services • Underbanked households account for 19.4 percent of all banked households • By definition, all underbanked households have used an AFS at least once or twice a year • Among underbanked households: • 81 percent use non-bank money orders • 30 percent use non-bank check cashing services • 16 percent use payday lending • 16 percent use pawn shops • 13 percent use rent-to-own services • 13 percent have used refund anticipation loans during the past 5 years FDIC National Survey of Unbanked and Underbanked Households

  20. Implications and conclusions • Significant proportions of U.S. households are unbanked or underbanked • Lower-income and minority populations are disproportionately represented among both groups • The proportions vary widely across regions, states and large MSAs • Many unbanked households have found it not cost effective to have a bank account, and many underbanked households use transactional AFS due to convenience and cost • About half of unbanked households were previously banked and over a quarter of those households became unbanked during the year before the survey was taken • Taken together, these results suggest there are significant opportunities for banks to offer financial products specifically tailored to the needs of LMI households FDIC National Survey of Unbanked and Underbanked Households

  21. Banking Needs of Americans with Disabilities Demographics 54 million people 22 million families Employment 22.0 million working age 7.6 million employed 12.9% unemployed (4/09) Geography 15% in the Northeast 31% in the South 28% Midwest 16% West Ethnicity 12.7% White 17.5% Black/African American 21.7 Native American 6.3% Asian/Pacific Rim 11.9% Other -- Cornell 2008 Disability Status Report

  22. Senior Banking Needs • 15% of Seniors and disabled still receive Social Security benefits by paper check • March, 2011, all new Social Security recipients, Veterans and Railroad pensions will only be available through direct deposit • March, 2013, all beneficiaries will be converted to direct deposit • Safety and funds availability are primary concerns to Seniors

  23. Immigrant Banking Needs • In some countries banks are not safe, secure or trusted. Immigrants will be concerned about FDIC insurance and about ready access to their funds. • Many send money back to family members in their home country. They may be interested in wire transfer costs. • Some lack SSN’s and will be interested in knowing about alternative forms of ID (e.g. matricula consular cards). • Because of language barriers, some may be uncomfortable writing checks. They will be especially interested in other options, like debit cards and online banking.

  24. What is Bank On? • The Bank On initiative is a collaborative effort started by the City of San Francisco and the Federal Reserve Bank of San Francisco about three years ago to address the needs of their city’s unbanked and underbanked households. The Bank On program has spread throughout the country and is based on a collaborative effort with local communities and their financial institutions, local governments, community based and nonprofit organizations.

  25. The Bank On Model • A Bank On campaign is driven by partnerships • State and Municipal governments • Community-based organizations • Financial institutions and regulators • State, Regional and local Asset Building Coalitions or VITA Sites • 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 • Conducting outreach campaigns to inform the public about these opportunities

  26. Benefits of Successful Programs • Financial institutions receive increased access to the untapped market of the un- and under-banked • Residents protect their income and assets and have more wealth-building opportunities • Community groups have access to more asset-building opportunities for their clients • Family financial stability= overall city economic vitality • Financial services can become a part of larger community asset-building strategies

  27. Partnerships are a vital ingredient – No one entity can do it alone • Local/State Government roles: • Elected official serves as champion • Convener of stakeholders • Uses bully pulpit to engage financial institutions and community organizations • Community organization and prosperity campaign roles: • Engages residents through direct outreach and referral • Acts as a primary service provider or convener for financial education • VITA sites offer connections to accounts • Assists with data tracking • Financial institution roles: • Provides insight and expertise into development and provision of appropriate financial products • Participates in outreach and marketing • Collects and tracks data for evaluative purposes

  28. What do we need from financial institutions? • Basic Savings Account • Basic Checking Account • Free or low cost • Product to fit the needs of your community’s unbanked population • Second Chance Account

  29. And… • Account tracking and measurement • Commitment to financial education opportunities • Work with employers who have a business relationship with your credit union to bank their low wage workers • Promote a “Bank On” culture for branch staff through training

  30. Why should my financial institutionget involved? • New customers that have received financial education • Marketing opportunities throughout the community • Financial stability for your community

  31. The Bank On Cities Campaign • Cities with established Bank On programs: • Evansville, IN • Los Angeles, CA • San Francisco, CA • Savannah, GA • Seattle, WA • St. Petersburg, FL • Marion County (Ocala), FL • Jacksonville, FL • Alabama Programs in Planning Stage: • Birmingham • Florida Programs in Planning Stage: • Central Florida (Orlando, Kissimmee area) • South Florida (Broward, Dade, Miami) • Lee County (Fort Myers) • Tampa Bay • Tallahassee • Lakeland • Tampa Bay

  32. Everyone is Welcome

  33. Jacksonville ○ Tallahassee ∆ Orlando/Kissimmee area ∆ Ocala ○ Bank on Florida Communities ○ Communities with existing BOF Programs. ∆ Communities in Planning Stages of BOF Program. Lakeland ∆ Tampa ∆ St. Petersburg ○ Fort Myers∆ Fort Lauderdale∆

  34. Contacts:

  35. Questions ? Contact Information: Bank On Florida: Bill Mills 407-797-6549 Bill.Mills@BankOnFL.org Bank On Alabama: Michael Milner mmilner@Alabamaabc.org