Mayor Gavin Newsom: Bank on San Francisco

Every day, thousands of San Franciscans are losing their hard-earned money simply because they do not have a bank account.

An estimated 50,000 San Francisco households are "unbanked," meaning they get by without a checking or savings account. Among African Americans and Latinos, approximately one in two adults has no bank account. Without access to mainstream financial services, unbanked San Franciscans are forced to turn to expensive check cashers, spending hundreds of dollars a year to cash checks and pay bills.

Estimates suggest unbanked families spend an average of 5 percent of their net income just to manage their basic finances.

A bank account is the first step on the road to financial security, and provides the necessary tools to climb the economic ladder and start saving for the future. With no safe way to access and save money, unbanked San Franciscans are also particularly vulnerable in times of crisis or emergency and could lose everything in the event of an earthquake or fire.

As mayor, I want to see San Francisco families keep all of the money they earn so they have more to spend on basic necessities like groceries, clothing and utilities and can start saving money and building assets.

I have been working closely with Treasurer JosŽ Cisneros as he leads our city's efforts to move all San Franciscans into the financial mainstream. We began by challenging every financial institution in San Francisco to partner with the City to create Bank on San Francisco, an initiative that would:
• Change bank products and policies to increase the supply of starter account options;
• Raise awareness among consumers about the benefits of account ownership;
• Provide quality financial education to San Franciscans.

Unbanked San Franciscans are concerned about the cost of having a bank account. Others believe that without a Social Security Card they are not eligible for an account. Some think they do not make enough money to have an account, or are intimidated by a traditional banking environment.

To directly address these concerns, all of the banks and credit unions participating in the program have agreed to:
• Offer a low- or no-cost product with no minimum balance requirement. The high minimum balances and fees of many accounts is a key factor keeping people out of the financial mainstream;
• Adapt internal systems to allow customers with a poor banking history to open "second chance" checking accounts;
• Accept Mexican Matricula and Guatemalan Consular identification cards as primary ID. For many immigrants, the barrier to opening an account is having the proper documentation;
• Expand marketing and outreach strategies in targeted, low-income neighborhoods, and increase the visibility of appropriate products in San Francisco;
• Provide financial management training in the community and partner with local community-based organizations to transition customers ready to enter the financial mainstream.

Last month, Cisneros announced the first year results of the program. Participating banks and credit unions report they have opened 11,110 Bank on San Francisco accounts since the program launched in September 2006 - far exceeding the original goal of 10,000 accounts in two-years.

With an average monthly account balance of $793.47, Bank on San Francisco is proving that with the right mix of products and outreach the unbanked can succeed in the financial mainstream.

In light of this success, the goal has been raised to 20,000 accounts by October 2008. The program is run in partnership with the Federal Reserve Bank of San Francisco, local non-profit EARN and 15 partner financial institutions, representing more than 170 participating branch locations citywide. Bank on San Francisco is an unprecedented attempt to address a serious, yet solvable social problem.

Through an innovative partnership that draws on the strengths of government agencies, for-profit banks and credit unions, and a wide range of community partners, Bank on San Francisco is the first comprehensive program in the nation to address the needs of the unbanked and set thousands of families on the road to financial security.

For more information about Bank on San Francisco, or to find a participating bank or credit union, call 2-1-1 or visit the Web site www.bankonsf.org.