The Bronx Financial Inclusion Project
To shift the "underbanked" community from high cost check-cashing services to low cost, regulated & insured banking services
I am not an employee of BNY Mellon, or an immediate family member of a BNY Mellon employee
I am over 18 years of age
My organization is incorporated as a non-profit, for-profit, or hybrid organization, or I have a partner that is incorporated and could accept funds on my behalf
I have already piloted my initiative and have some initial evidence of impact
My organization is headquartered and creating impact in the United States
Where are you making a difference?
New York: Bronx 10451, 10452, 10454, 10455, 10456, 10457, 10458, 10459, 10460, 10463
Focus Areas (required)
Business & Social Enterprise
Development & Prosperity
Environment & Sustainability
Human Rights & Equality
September 15, 2017
Project Stage: Select the description below that best applies to your approach.
Growth (have moved past the very first activities; working towards the next level of expansion)
1.Founding Story: Share a story about the "Aha!" moment that led the founder(s) to get started or the story of how you saw the potential for this to succeed.
In Fall 2017, Ava was a senior at Fordham, living in a Bronx homeless shelter on $30/week for food for 5 family members. Her father had lost his job a year ago, but his African Caribbean pride had kept that news from the family. After the Marshalls took their home, Ava no longer owned even a toothbrush. When she shared this with me, 10 months later, it sparked a Collaboratory Systems Thinking Practicum on the loops and forces that both enable and inhibit the University to address housing insecurity in students. As we unfolded the deep core story over many months, there was an AHA moment where I realized that the process we were using, could be applied to Spring Bank’s efforts at financial inclusion in areas around the University.
2. The Problem: What problem are you helping to solve?
The underbanked are continually forced to seek loans from alternative financial services(a.k.a. check cashers and pay day loans) at interest rates considered to be excessive (300% being typical) The question is why the underbanked seek higher fee services when Community Development Financial Institutions(CDFIs) located in these communities offer much lower or no fee services.Existing pilot programs are not generating the expected types of result
3. Your Solution: How are you planning to solve this problem? Share your specific approach.
A Systems Thinking analysis will be conducted by the Fordham Social Innovation Collaboratory and CDFI Spring Bank to create a systems "map" of forces that influence the choice of alternative financial services by underbanked individuals. Language, documentation, cultural preferences, spending and loan habits/practices will all be evaluated in a structured approach. Voices of the underbanked, check casher customers and staff, CDFI bank executives, small business owners, educators will be canvassed. Based on data from those queries, the project will iterate around the different strategies already being applied by Spring Bank and their non profit partners. An objective of the project will be to generate opportunities for those individuals to put aside into savings what they would have been spending on check cashers. Success will be measured based
on the number of accounts opened, the amount of savings generated by those previously considered underbanked, and financial services provided.
The approach will be based on a system created by the Omidyar Group : Systems Practice: A Practical Approach to Move from Impossible to Impact at novoed.org
4. Example: Please walk us through a specific example of how your solution is working to solve the problem.
In 2017-18 the Collaboratory launched Systems practica analyses about populations similarly targeted by Spring Bank. These include: students with housing insecurity, and refugee/asylum students who receive incomplete university services because of Visa restrictions, including a block to receiving healthcare insurance. Results of tracing the deep core story to these challenges included the successful placement of a homeless student into dormitory housing, who moved forward with improved grades to land a $90k/year job in a prestigious financial company after graduation. In Spring Bank, a consumer achieved an employee opportunity loan, continued to make payments into their savings account after the loan was paid off, and in that way was able to achieve savings that created a buffer towards future financial emergencies while also improving their credit score.
5a. Too many people in the U.S. have unmet needs for financial products and services. How is your work reaching a population(s) that is currently underserved? If it is not reaching an underserved population yet, how might it in the near future?
The Bronx region addressed by this project is notable for its many "firsts". It is first in the level of poverty of any congressional district in the U.S., first in number of single parent households, first women headed households, and first in number of children living in poverty.
5b. Please specify if the population you are reaching is underserved due to any of the following characteristics:
age - youth
age - elder
6. Marketplace: Who else is addressing the same problem? How does the proposed project differ from these approaches?
Many financial service institutions are addressing this, yet the number of underbanked individuals remains high. Underbanked households in NY grew from 19.6% in 2013 to 23.8% in 2015 [FDIC]. Forbes Magazine (5/10/17) writes that 51.1 million U.S. adults are considered underbanked, and are ignored by most banks because they typically have poor credit ratings and are unlikely to generate meaningful deposits or banking fees. Muhammud Yunis created Grameen lending groups to achieve success for unbanked individuals. Our approach brings "pracademics" to a CDFI for a fresh multi-sector approach.
7. Impact: How has your project made a difference so far?
Spring Bank recently instituted a model for underbanked individuals that allows them to cash checks without having an account, at rates greatly reduced from those charged by check casher services. The results are: 3000 individuals cashed checks last year in 12,000 total transactions. Spring Bank also partnered with Arriva- a financial free income tax preparation program certified by the IRS - and located them inside Spring Bank, and they completed over 5000 tax returns for low income families for 2017.
8a. Spread Strategies: Moving forward, what are the main strategies for scaling your impact?
Fintechs are currently building scale for the underbanked. But, customers have to pay the Fintechs who then pay the banking fees so there are two layers of cost. By supporting the CDFI network to engage directly with the underbanked, there is support for a strategy that will build scale that is both regulated, and potentially more cost effective. Having a nationwide infrastructure in place may help build scale efficiently and effectively across the country, with the startups and technological apps creating a supporting role.
8b. If applicable, which of the following scaling strategies have you launched?
9. Financial Sustainability Plan: What is this solution’s plan to ensure financial sustainability?
CDFI's will become self sufficient in these practices through increasing core deposits by a costumer base they have not been able to reach before. Additional loan revenues will be generated through small business loans that may not have otherwise been possible under traditional banking models.
10. Team: What is the current composition of your team (types of roles, qualifications, full-time vs. part-time, board members, etc.), and how do you plan to evolve the team’s composition as the project grows?
Two team leaders are Director, Fordham Social Innovation Collaboratory, and Chief Operations Officer, Spring Bank. Both have extensive education and experience. These leaders have created a board for the collaborative project that includes 2 students, 2 faculty, 1 U. admin, 2 bank executives, and 2 community members. This board will oversee several working groups, each with a defined leader, to address different research and innovation aspects of the project.
Help Us Support Diversity! Part 2 - Do you identify as part of any of the following underrepresented communities? (optional)
Communities of color
Religious minority (non-Christian)
How did you hear about this challenge?