Magazine article American Banker

Bank One Gets 250 Accounts in Program for Poor People

Magazine article American Banker

Bank One Gets 250 Accounts in Program for Poor People

Article excerpt

WASHINGTON -

If the ex-perience of Bank One Corp. is any indication, banks could gain a wave of customers by offering electronic accounts to low-income people.

The Chicago banking company has opened more than 250 accounts under a nine-week-old pilot program that several community groups helped design, officials said.

"We were stunned," Mary A. Laraia, Bank One's senior vice president of community reinvestment. "We were going to declare victory if we got 75."

Bank's One success bodes well for banks that plan to offer similar accounts under a federal program unveiled last month by the Treasury Department.

As part of the effort to deliver government benefits electronically, the Treasury plans to contract with banks to provide accounts to the more than six million Americans receiving federal benefits who lack accounts.

If participating banks meet certain conditions, the government will pay them $12.60 per account to cover start-up costs and will grant Community Reinvestment Act credit.

Banks may not charge more than $3 per month for the accounts or require a minimum balance. Customers must also be permitted four free withdrawals per month. Additional deposits and interest payments are permitted, and fees may be charged for extra withdrawals or services such as automated teller machine card replacement.

So far, seven other banking companies have agreed to offer the accounts, including Bank of America Corp., Chase Manhattan Corp., and Wells Fargo & Co.

Malcolm Bush, president of the Woodstock Institute, an economic and community development group based in Chicago, said Bank One's initial success shows how the industry has underestimated the untapped markets in low-income communities.

"Some banks have made an effort to shape accounts for low-income people," Mr. Bush said. "But having the product is just part of the story. …

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