Sustainable Financial Institution Engagement

First published March 2012

This report from the CFED looks at the Bank On programs that first emerged in San Francisco and have since moved piecemeal across the country. While the program has laudable goals and significant interest from community members, non-profits, government agencies and financial institutions, several obstacles continue to hamper the long-term sustainability of the program.

Some key points to take away from the report: lack of access to banks continues to be a major problem for lower-income populations, and reliance on non-bank institutions like payday lenders and check cashing businesses hits hard;  “unbanked households in California pay up to $1 billion a year to cash checks and pay bills through non-bank providers,” as the report notes. In addition, most unbanked families or households have at least one member who works full-time. Inability to build savings and credit histories can be a crucial block for would-be entrepreneurs looking to secure a start-up loan.

While the consensus seems to be that Bank On programs work best when led by governmental agencies, non-profit organizations, including CAMEO members, can still play a key role in supporting and sustaining these programs.

For more information, visit the Bank On California website, a state agency that coordinates reporting and requirements for the various local initiatives — a key structure praised by participating banks and credit unions.