BankOn Model: Improving Access to Safe & Affordable Banking

Cities around the country are trying out a new model to expand access to safe and affordable bank accounts and services. Called “BankOn,” the program is founded on the belief that banking is an essential service, but high and unexpected fees makes mainstream banking too expensive for many people. Championed by the Cities for Financial Empowerment Fund (CFE), BankOn works to expand access to safe and affordable accounts and as a result, help build financial stability and security.

What Does BankOn Entail?

At the heart of the model are the standards for certified BankOn accounts, including no overdraft fees, maximum monthly account maintenance fees of $5, and free mobile and online banking. These are meant to ensure the services and accounts offered are easy to access, don’t penalize customers without a significant cushion in their accounts, and meet the everyday needs of account holders.

These account standards are then bolstered by CFE’s work to support local coalitions who help expand these products and promote them with underbanked and unbanked members of the community. In many communities local coalitions have also added free one-on-one financial coaching to help people develop the skills and habits that will help them reach their personal financial goals.

BankOn coalitions typically include financial institutions, including major national banks, local banks, credit unions and financial regulators; community partners, including United Ways; financial service nonprofits, and local service providers; and local government agencies. Together they develop plans for connecting people with BankOn accounts and free financial coaching, tailoring strategies to meet local needs.

Why Safe & Affordable Accounts?

Being unbanked is expensive. Check cashing fees, high-cost loans, and delays in getting access to your money can all add up quickly. Access to safe and affordable banking has been shown to have significant impact on financial stability. Before you can get a mortgage, buy a car, or take out small business loans, you have to be banked. Research has demonstrated the powerful impact of automatic deposits in building up emergency funds and saving for future plans.

It’s also often much more efficient to have bank accounts. They provide a central location for financial services without running around town to visit various offices and businesses. Bank accounts are the foundation of  wealth-building strategies.

Success: Why Does it Work?

The BankOn Model works for banks and their customers. Recent analysis by the Federal Reserve Bank of St. Louis shows BankOn accounts had a significant impact on bringing in new business to the participating banks. Seventy-two percent of all Bank On accounts are new clients. Data shows high demand and usage of the accounts by new customers, as well as high retention.

By offering accounts with low to no fees and easy access, banks are serving customers who have found them too expensive in the past. By eliminating high monthly account fees, overdraft fees, bill pay fees, and minimum balance thresholds, these accounts are safe and affordable to customers with fluctuating income and expenses who have yet to save up a financial cushion in their accounts.

BankOn accounts have been most successful when paired with free one-on-one financial coaching, building up the financial management skills of account holders as they work with coaches to reach their personal financial goals.

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