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| D2D's beta test will help us to determine if Online IDA can
make traditional IDA products more cost effective and profitable for
FleetBoston Financial. The resultant cost analysis, participant reactions,
assessment of savings patterns, and other information offer us the
very real possibility of accessing untapped markets, while providing
low-income households with greater access to financial services. |
Gail Snowden, Managing Director
Fleet Community Investment Group |
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| FleetBoston |
Headquartered in Boston, Massachusetts, FleetBoston
Financial Corporation is the seventh-largest financial holding company
in the United States with assets of $196 billion. The company’s
principal businesses— Personal Financial Services and Commercial
Financial Services—offer a comprehensive array of financial
products to over 18 million customers.
Among its products, FleetBoston offers Individual Development Accounts
(IDAs) to members of community-based organizations throughout Fleet’s
footprint. IDAs are matched savings accounts that enable low- to moderate-income
(LMI) individuals to save for first-time home purchases, business
start-ups, or education. Similar in concept to a 401(k), IDA matching
is typically $2 for every $1 from the participant and is accompanied
by basic financial education from the community-based organization
administering the program.
The potential for these products within Fleet's footprint is significant:
there are currently 3,128 low- to moderate-income census tracts in
Fleet’s trade area, where 360 of Fleet's branches now reside.
However, despite their effectiveness as economic development tools,
tracking and record keeping for IDAs can be time consuming, confusing,
costly and prone to errors for the financial institutions providing
them.
To address this issue, Doorways
to Dreams (D2D) created Online IDA—an electronic version
of the product that could reduce overall costs to the banks and ease
administrative, record-keeping and educational burdens for the community-based
organizations that administer them. It is also anticipated that Online
IDA will provide a more cost-effective distribution channel for Fleet
to expand the number of IDA programs offered to community-based organizations
throughout its footprint.
Online IDA is currently being beta tested in several locations. One
of them is Allston
Brighton Community Development Corporation (Allston Brighton CDC)—Fleet’s
community partner in inner-city neighborhoods in Boston. Allston Brighton
CDC provides program participants the incentive savings matches, personal
finance and money management education, peer and staff support, and
individual counseling. Through Online IDA, Allston Brighton CDC offers
unprecedented access to basic financial services and helps low- to
moderate-income families build savings.
"Our organization is proud to be participating in this important
test through our partnership with Fleet. We have been running a successful
Individual Development Account program here for four years, said Robert
Van Meter, Executive Director, Allston Brighton CDC. "We understand
that for asset building programs to go to scale nationally there must
be dramatic changes in the way program information is collected and
managed. We hope that this test will help convince funders and financial
institutions alike that IDA programs can be managed effectively and
efficiently."
During the beta test for Online IDA, Fleet will receive reports from
D2D on cost analysis, participant reactions, savings patterns vs.
traditional IDA programs, and other valuable information that will
enable Fleet to determine the product’s market opportunities.
Proposed federal legislation could increase the number of IDAs from
20,000 this year to more than 300,000 in 2011.
To learn more about Fleet’s partnership with Allston Brighton
CDC and its participation in the Online IDA beta test, contact Kathia
Manzi at (617) 434-5448.
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