Bank on San Francisco: welcoming all citizens into the financial mainstream: cities are well-positioned to play a catalytic role in working work with banks, community groups, and other stakeholders to build an inclusive financial system. Bank on San Francisco is one attempt to address a serious, yet solvable, social problem.

• Author: Cisneros, Jose
• Position: Solutions

The Bank on San Francisco program won the 2008 Louisville Award for Innovation in Government Finance. The Government Finance Officers Association gives this special recognition to acknowledge exceptional accomplishments that introduce new concepts or techniques with enduring value to the government finance profession.

Like most cities, San Francisco is a city of two different financial services systems. In one, people may choose from a variety of institutions to safely save and access their income, obtain loans to buy homes and build businesses, and create financial stability and prosperity. But for many San Franciscans, there are seemingly insurmountable obstacles to accessing this system. They turn to check cashers, payday loan providers, pawn shops, auto title lenders, and rent-to-own stores. These alternative providers charge high fees and can mire individuals in a cycle of debt, even if they work hard and earn a paycheck week after week. Individuals are hard-pressed to build savings and assets if they rely on check cashers to conduct their financial lives. This problem is not unique to San Francisco. In fact, one in four Californians--and an estimated 22 million Americans--are "unbanked," meaning they lack access to a basic checking or savings account.

An estimated 50,000 San Francisco households are unbanked, and it was incumbent upon the city to take action and assist these citizens. Families that rely on check cashers can spend approximately 5 percent of their income each year to cash checks and pay bills. Those who least can afford it are charged 3-10 percent of the value of their checks just to access their own money. Unable to build assets and save for the future, these families are particularly vulnerable in times of crisis, and they are more likely to become victims of crime. In the event of an emergency such as a fire or an earthquake, these families risk losing everything and will be unable to access needed funds remotely.

In response to this obvious need for better financial products for city residents, the San Francisco treasurer's office created Bank on San Francisco. This initiative is a collaborative effort, along with the Federal Reserve Bank of San Francisco; EARN, a non-profit organization that matches the savings of low-wage workers and helps them invest in assets that build wealth; and 17 local banks and credit unions. San Francisco is the first city in the nation to seek to address the problems faced by the...