The Department of Insurance, Securities and Banking (DISB) recently helped kick off Bank On DC, a program many project will assist District families achieve financial stability.
Bank on DC is intended to bring the District’s unbanked and underbanked populations onboard to become a part of the mainstream financial institutions such as banks and credit unions by giving them an opportunity to open new accounts and avoid fees on check cashing services. According to the FDIC, 12 percent of the District’s residents are unbanked compared to 8 percent nationally. The District is estimated to be home to roughly 37,000 unbanked households and 72,000 underbanked households representing a total of 235,000 people who may or may not have bank accounts, and who frequently access checking and credit services through alternative financial services such as check cashers. In the District, it was estimated that more than 1 million checks are cashed in the city each year. The average check value of $444 generated an average fee of 2-3 percent. Therefore, about $10-15 million are spent by low and middle income families on fees to access money they have earned.
“We invite financial institutions to join us in creating financial services that are safe and affordable not only for the unbanked and underbanked populations but for all District residents,” said DISB Commissioner Gennet Purcell. “We encourage community organizations to assist in dispelling misperceptions and beliefs about bank and credit union accounts, and to educate our residents about the benefits of opening and maintaining a checking account.” As of January 2010, more than a dozen financial institutions have expressed a soft commitment to participate in Bank on DC.
Bank on DC will build off the blueprint established by “Bank on” programs in San Francisco, Seattle and other cities and will involve key elements such as local financial institutions providing appropriate financial products and services for the underbanked; an outreach campaign to encourage the underbanked to open Bank On DC accounts; assistance to employers to encourage banking by going paperless with their payroll, and significant financial literacy services to the underbanked.
The October 28 kick-off at the office of the Washington, DC, Economic Partnership featured several agencies instrumental in bringing the program to the District, including the Office of the Deputy Mayor for Planning and Economic Development and the City Administrator’s office, as well as Leigh Phillips who spearheaded the Bank On San Francisco program, heralded as a national model program. DISB will work with the Deputy Mayor’s office to help low income and foreign-born families save money, by setting a target of opening 10,000 accounts for unbanked individuals, and to put 10,000 individuals on direct deposit by the end of 2010. The intention is to assist these families in stashing away what would have been spent on check cashing fees for emergencies, living costs or personal investments. DISB plans to work closely with participating financial institutions as well as other District agencies and any state or federal regulators that have helped other cities develop Bank On programs. The program is expected to launch in the District during Financial Literacy Month in April 2010.