Department of Financial Services Issues New Guidance to New York Regulated Banks to Increase Availability of Low-Cost Banking Services
State-Regulated Banks can now offer "Bank On" Certified Accounts to meet their Affordable Banking Requirements
Access to Low-Cost Accounts is Fundamental to Financial Health so Low-Income New Yorkers have Affordable, FDIC-Insured Banking Options to Protect and Grow Hard-Earned Savings
Governor Kathy Hochul today announced new guidance to expand access to low cost bank accounts for New Yorkers in recognition of National Financial Literacy Month. New DFS guidance encourages State regulated banks to offer "Bank On" certified accounts to fulfill the state's affordable banking requirements. Bank On accounts eliminate overdraft fees and are critical to attracting individuals from underserved communities into the banking system. These reforms are critical to help low-income New Yorkers access affordable, FDIC-insured banking options that protect and grow hard-earned savings. This builds on the Governor's financial inclusion agenda that includes tackling debt and surprise billing, helping families and graduates with student loans, strong consumer protection and transparency requirements for financial products and other recent actions to help New Yorkers gain financial security.
"Financial literacy is an essential life skill for everyone's financial wellbeing, and that is why New York State continues to take bold steps to increase access to affordable banking services," Governor Hochul said. "The COVID-19 pandemic has shown how important it is for every New Yorker to have financial security, and access to low-cost banking services is critical to managing and securing their financial needs. These new accounts will help hard working individuals in underserved communities get the affordable, accessible banking options they need and is a crucial step towards ensuring a more inclusive economy for all."
Superintendent of Financial Services Adrienne A. Harris said, "The ability to have a bank account is fundamental to the idea of financial health. Through both Bank On and Basic Banking accounts, more New Yorkers can have access to safe, affordable banking services that eliminate a number of fees, including overdraft, inactivity and low balance fees."
According to a survey conducted by FDIC, an estimated 7.1 million U.S. households were "unbanked" in 2019, meaning that no one in the household had a checking or savings account at a bank or credit union. Consumers in low- and middle-income communities have often been saddled with bank account fees if they overdraw their account, dip below a balance threshold, or fail to use their account regularly. Under current law, banking institutions are required to offer lower cost banking services either through the New York Basic Banking accounts or through an alternative that is as advantageous to consumers. These accounts eliminate burdensome fees in order to expand access to bank accounts among low- and middle-income communities.
Making Bank On accounts an alternative to the existing New York Basic Banking account offering is a critical a step to enhancing financial access and improving financial literacy across the State. "Bank On" Accounts are nationally recognized and widely available. Affordable bank accounts like "Bank On" that eliminate overdraft, account activation, closure, dormancy, inactivity, and low balance fees are critical to attracting individuals from these underserved communities into the banking system. The Bank On program has inspired millions of consumers nationwide to open new bank accounts, and this action will help make these accounts more accessible across New York State.
State Senator James Sanders Jr. said, "I commend Governor Hochul and the New York State Department of Financial Services for issuing Bank On and Basic Bank Accounts. As the Chairman of the Senate Committee on Banks I know New York has a critical need for affordable and accessible banking services. The actions taken by the Governor and DFS are essential to increasing the accessibility of financial services for all."
Assemblymember Patricia Fahy said, "Far too many New Yorkers, especially in our disenfranchised and disadvantaged communities, lack critical access to financial services. I applaud the new guidance issued by Governor Hochul and the New York State Department of Financial Services to expand access to low-cost bank accounts for New Yorkers. There is an essential need to ensure that financial services and banking is accessible to all of New York's communities—not just some. I commend Governor Hochul and the Department of Financial Services for their continued leadership on this issue."
Assemblymember Khaleel Anderson said, "As Chair of the Subcommittee on Banks in Underserved Communities, I commend Governor Hochul and Superintendent Harris for launching Bank On, a new initiative that will expand access to low-cost accounts and help uplift our underbanked communities. Here in Southeast Queens, Black and Brown families in neighborhoods like Arverne and Rosedale live in banking deserts, where the departure of brick-and-mortar banking institutions has jeopardized financial health and economic opportunity. As a state legislator, I have passed critical legislation to support underbanked communities and help provide resources for small business owners, including our MWBEs, as we fight to restore viable access to credit, capital, and loans. I am committed to working with the Governor and DFS to ensure that working-class families have access to affordable, FDIC-insured banking options that protect and grow their hard-earned savings for generations to come."
President and Chief Executive Officer of the Cities for Financial Empowerment Fund Jonathan Mintz said, "Bank On is so pleased to partner with Governor Hochul and the New York State Department of Financial Services to help increase New Yorkers' access to safe, affordable, and fully functional banking accounts. Today's move by the Governor will make it even easier and more appealing for financial institutions chartered in New York to join the over 200 other banks and credit unions across the country with certified accounts and provide residents with this fundamental tool to promote financial stability and growth."
A 2020 study by the Federal Reserve Bank of St. Louis found that 80% of consumers opening Bank On accounts were new to that institution and nearly 60% were opened in majority minority neighborhoods. Today's regulatory guidance expands the availability of the nationally recognized Bank On account by allowing New York banking institutions to offer those accounts as an alternative to the existing Basic Banking account. Bank On accounts follow a set standard to offer account features with low or zero fees, including no overdraft fees.
Please find a copy of the Bank On Guidance on the DFS website.