Recognizing that something more must be done to address the City of Boston’s persistent and growing racial wealth gap, former Mayor Martin Walsh created the Office of Financial Empowerment (OFE) to connect Boston residents with skills and resources to improve their financial empowerment and advance their economic equity. The OFE was created to develop strategies and policies to impact the racial wealth gap and build community and individual wealth for neighborhoods with high concentrations of zero to low- and moderate-income households.
As part of this citywide initiative, the OFE launched Bank On Boston, a coalition of community-based organizations, financial institutions, regulators, and volunteers, to help unbanked and underbanked Bostonians open and maintain zero-to-low cost checking and savings accounts. In addition to connecting residents with non-predatory financial services, the Bank On Boston Coalition also raises public awareness of mainstream banking, expands access to financial education and credit building products, and connects residents to other OFE programs. Bank On Boston is one of 80 state and local coalitions that make up the national Bank On movement.
According to the Federal Deposit Insurance Corporation (FDIC)’s 2019 “How America Banks: Household Use of Banking and Financial Services,” approximately 10% of the households in Boston do not have a checking or savings account and rely on costly check-cashing and other alternative financial services, a key factor that contributes to the City’s racial wealth disparities. For these residents, opening a safe, affordable and non-predatory checking or savings account is an important step toward improving financial wellness.
Bank On Boston is a key program in Mayor Kim Janey’s Office of Financial Empowerment where residents can also access virtual coaching, access benefits, maximize income support, obtain virtual, free tax preparation services, and open bank accounts online or in person.
According to Mayor Kim Janey, “Bank On Boston is both integral and strategic to our equity agenda. As we move towards an equitable recovery from the pandemic, our sense of urgency will drive our response. Non-predatory bank accounts, coupled with innovative financial empowerment strategies, will provide a foundation to address economic and racial justice challenges.”
The Bank On Boston coalition is comprised of 82 local stakeholders and partners, including financial institutions like JPMorgan Chase, Bank of America, Metro Credit Union, Berkshire Bank, and Dora p/b USALLIANCE Financial, as well as community-based organizations like LISC Boston, Jewish Vocational Services, and the United Way of Massachusetts Bay. Regulators in the coalition include The Massachusetts Division of Banks, The Federal Reserve Bank of Boston, the Office of Comptroller of the Currency, and the FDIC.
According to Michael Andelman, program manager for Bank on Boston, “The Bank On Boston coalition emphasizes the importance of safe, affordable, non-predatory banking opportunities, rather than high cost or alternative services such as check-cashing sites. Through our coalition members, we are empowering more Boston residents to build their wealth by encouraging economic mobility, and equitable access to the mainstream banking system.
By the numbers
• Over 5% of U.S. households (approximately 12 million adults) are “unbanked,” without a checking or savings account.
• Almost 11% of U.S. households (approximately 24 million adults) are underbanked, meaning they still use some fringe financial services, like check cashing facilities.
• Nearly 34% of unbanked and 45% of underbanked households earn less than $30,000 per year.
• Hidden fees and overdraft fees are worth over $11.45 billion in profits for the banks. Bank On National Account Standards (NAS) eliminate overdraft fees and can save residents nearly $1,300 annually.
• Nearly 80% of bank overdraft and Non-Sufficient Funds (NSF) fees are borne by only 8% of account holders. This group of account holders incurs 10 or more fees per year, with many paying far more.
• Access to banking and financial services became more critical than ever this year as more people were forced to utilize online services and the Federal and State government distributed unemployment and economic impact payments, aka stimulus relief.
