Governor Will Propose Creation of the Excelsior Banking Network to Increase Access to Affordable Financial Products in Underserved Communities
Governor Will Launch a New Statewide Office of Financial Inclusion and Empowerment
Builds on the Governor's Efforts to Expand Access to Safe and Affordable Banking Services, Credit and Financial Education
Governor Andrew M. Cuomo today unveiled the 21st proposal of his 2020 State of the State agenda - expanding access to safe and affordable financial services. As part of this proposal, Governor Cuomo will propose the creation of the Excelsior Banking Network, which will increase access to safe, affordable bank accounts and small-dollar loans in underserved low-income communities across the State. The Governor will also propose the creation of a statewide Office of Financial Inclusion and Empowerment to meet the financial services needs of low- and middle-income New Yorkers. This proposal builds on the Governor's efforts to expand access to safe and affordable banking services, credit and financial education.
"We've made significant strides expanding access to banking services for low income New Yorkers, but too many people still live in banking deserts," Governor Cuomo said. "As a result, these New Yorkers often turn to costly check cashing services or take out illegal predatory payday loans because they can't access affordable small business loans at community banks. These sweeping proposals will provide New Yorkers with the services they need to build their credit, improve financial literacy and take charge of their economic futures - helping build a fairer and stronger New York."
Excelsior Banking Network
According to the Federal Deposit Insurance Corporation, or FDIC, approximately 25 percent of New York households do not have bank accounts or seldom use one and rely on costly non-bank services for their financial activities.
The Governor will propose creating the Excelsior Banking Network to provide $25 million in new seed funding over five years for New York's Community Development Financial Institutions Fund - or CDFI Fund - to be used in accordance with State criteria to expand financial inclusion and access to affordable bank accounts and credit products. CDFIs are local financial service providers with locations throughout New York State, and often are the sole provider of banking and other financial services in low-income communities that are not served by traditional banks and financial institutions.
Under the Governor's proposal, participating CDFIs will leverage this funding to an aggregate of $300 million in targeted investment in underserved communities New York. CDFIs will work closely with the state Department of Financial Services and other state agencies to create the Excelsior Banking Network, an accessible, statewide network of safe and affordable banking services and financial literacy programs. This network will expand access to low-cost bank accounts to low-income New Yorkers who often find that the only accessible banking service in their communities are high-cost check cashers who take huge finance fees out of people's paychecks. The network will also engage in outreach and financial literacy education to the unbanked as well as expand microcredit available to MWBEs and other small businesses.
Statewide Office of Financial Inclusion and Empowerment
The Governor will propose the creation of a statewide Office of Financial Inclusion and Empowerment to meet the financial services needs of low- and middle-income New Yorkers across the state. There is currently no single-stop state resource where New Yorkers anywhere in the state can find help for their financial access and empowerment needs. Based at the State Department of Financial Services, the Office will maintain a centralized list of financial services counseling providers - across housing, student loan, debt and general financial literacy - throughout the State and coordinate state and local services aimed at expanding access to credit and enhancing financial empowerment. The Office will also incubate new programs to expand access to safe and affordable banking services, credit and financial education; coordinate public-private partnerships; and foster provision of high-quality, low-cost financial products statewide.
Governor Cuomo has been a strong advocate for expanding access to critical financial services, like banking and credit, for marginalized communities in New York. Under the Governor's leadership, Empire State Development has used the $50 million Small Business Revolving Loan Fund to make substantial loans to Community Development Financial Institutions that serve underserved communities throughout the State. Further, the state Department of Financial Services' Banking Development District program has enabled the opening of brick and mortar banks in more than fifty underserved communities across New York State.
Despite this progress, too many New Yorkers, particularly lower-income citizens, communities of color and immigrants, have difficulty accessing basic banking services and credit for small businesses, and too few quality financial services options exist for the low- and moderate-income communities that need them the most. In New York there are also banking deserts with no brick and mortar banks for miles in rural communities, or underserved urban centers where residents must rely on costly check cashing services. Consequently, many New Yorkers pay high transaction fees just to access their weekly wages and are left vulnerable to predatory lending practices and financial insecurity. The lack of services is compounded by difficulty in obtaining free financial counseling or improving financial literacy. Even in communities where these services are available, it is difficult for consumers to identify and access them, as the information is spread across multiple platforms and providers and is not always available to New Yorkers for whom English is not their first language.