Mayor Mark Mallory announced on Thursday that the Bank On Greater Cincinnati initiative during its first two years reached 1,700 residents previously without a bank account, which could help boost their economic mobility. The residents kept an average of $701 in their new accounts.
The initiative connects local residents with traditional financial services so they’re less reliant on check cashing and payday lending businesses. The average user of payday lending services spends $900 a year in fees, according to the mayor’s office.
Of course, the initiative benefits banks as well by connecting them to more potential customers who otherwise might forgo traditional banking services.
Bank On Greater Cincinnati is a partnership between Cincinnati, Covington, Newport, SmartMoney, the Cincinnati branch of the Federal Reserve Bank of Cleveland and 13 participating banks.
SmartMoney now manages Bank On in conjunction with Greater Cincinnati Saves, which encourages individuals to make a pledge to grow their savings.
“We are helping move people into the financial mainstream so they can begin to save and build assets,” Mallory said in a statement. “I want to thank all of our partners that help make this initiative so successful. Bank On will continue to help families establish bank accounts and receive strong financial education to help them manage their money.”
A November 2009 study from the Economic Mobility Project found a connection between savings and economic mobility. According to the study, high personal savings can greatly benefit both an individual during his or her lifetime or the individual’s children.
“Seventy-one percent of children born to high-saving, low-income parents move up from the bottom income quartile over a generation, compared to only 50 percent of children of low-saving, low-income parents,” the study found.
The improvement could add up for Cincinnati, which is still mired in troubling economic indicators despite some economic progress in the past few years. More than half of the city’s children lived in poverty in 2012, according to the U.S. Census Bureau. Another study released in July by economists at Harvard University and University of California, Berkeley, found Cincinnati ranked 650 among 728 markets analyzed for upward economic mobility.