Reaching our city’s “unbanked” population.
Today I hosted a meeting of local bank and credit union executives to lay the groundwork for a new anti-poverty initiative in our community called “Bank On Memphis.” With this program, banks and credit unions are asked to develop checking account and savings account products that are targeted towards low-income families that do not presently use any kind of mainstream financial institution.
According to the Pew Research Center, there are between 30,000 and 50,000 people in Shelby County right now who do not use any kind of mainstream financial institution. Bill payments, utility payments, and loans are transacted at title loan establishments and check cash businesses which often charge interest rates of over 300%. The annual cumulative household wealth that is lost by this “unbanked” population to high interest fees is in the millions.
Bank On will combat this by asking banks and credit unions to develop checking accounts and savings accounts that are appropriate and targeted towards low-income households. After these products are developed, the banks work closely with non-profits and community groups to promote them.
Bank On was pioneered in San Fransisco five years ago by Mayor Gavin Newsom and his treasurer, José Cisneros. Since then, cities across the United States have adopted Bank On programs, from Seattle to Boston to Evansville. The program is supported by the National League of Cities and renowned nationwide for helping to break the stranglehold of poverty in urban areas.
Bank On Memphis is expected to launch in early December of this year, and our goal is to open 5,000 new checking accounts over the course of 2011. We’re going to need a lot of help to make this happen. If you would like more information or are interested in assisting with one of our volunteer committee groups, please contact Corky Neale at the RISE Foundation by clicking here.
Our thanks to the RISE Foundation, the Federal Reserve Bank of St. Louis – Memphis Branch, and the Federal Deposit Insurance Corporation for their leadership and hard work, and to the leaders of BankTennessee, Magna Bank, Paragon National Bank, Wachovia Bank, Hope Community Credit Union, Cadence Bank, Commercial Bank & Trust, Regions Bank, SunTrust Bank, Bank of America, First Tennessse, and Southern Security Federal Credit Union for taking part in today’s meeting!