# Presentation: 513492

## Citigroup’s Experience withIndividual Development Accounts (IDAs)

- Ellen Tower
- August 24, 2006

## Topics

**IDAs – Citigroup’s Experience**
**IDAs – Potential and Limitations**

## I. IDAs – Citigroup’s Experience

## Citigroup’s History and Experience - Philanthropy

- Citigroup was one of the first financial institutions to contribute to initial IDA pilot programs.
- Our grant support for IDAs includes:
- $1.5 million since 1999 to CFED to support the American Dream Demonstration Program, asset building education and outreach
- More than $2 million in operational support of local programs over the past five years
- $500,000 in 2004 to the “next generation” of asset building tools, Savings for Education, Entrepreneurship and Downpayment (SEED)
- We have been the Platinum sponsor of CFED IDA Learning Conferences.
- We have learned that LMI individuals, if given the opportunity and correct incentives, will save.

## Citigroup’s History and Experience - Business

- Early in the IDA movement, Citigroup was responsive to requests by local IDA partners to manage accounts.
- We have been the only bank in some markets willing to manage these accounts.
- Our financial management product is the Citiescrow account, which has no fees, no minimum balance and is interest bearing.
- A master account is created with the non-profit agency
- Sub-accounts are developed with IDA participants
- Account statements are sent to non-profit partners and individual account holders.
- Historically this product has been widely used by attorneys to escrow client funds.

## Citigroup’s History and Experience - Reporting

- In 2002, we initiated tracking of our IDA accounts.
- Over the years, we have managed 54 programs totaling 3,500 accounts.
- As of the end of 2005, almost 2,700 accounts were being managed through our programs.
- Our IDA program spans all Citigroup retail branch markets.
- We implement different IDA program structures, including stand alone and consortium programs, in different markets depending on need.
- The value of using these varied program structures is to better understand the best ways to reach people cost effectively.

## 
We use a team approach to managing IDA Programs.

Consumer Bank, Community Relations, Citigroup Foundation and the CRA Unit are involved.

The team focuses on short- and long-term bank strategy.

Our IDA program is part of a larger strategy of developing profitable products that help LMI populations build and retain assets at a much larger scale.

- We use a team approach to managing IDA Programs.
- Consumer Bank, Community Relations, Citigroup Foundation and the CRA Unit are involved.
- The team focuses on short- and long-term bank strategy.
- Our IDA program is part of a larger strategy of developing profitable products that help LMI populations build and retain assets at a much larger scale.

**Citigroup’s History and Experience – Internal Structure**

## Services Citigroup Provides

- In addition to products, Citigroup provides the following services to its IDA partners:
- Citigroup Financial Education Curriculum in English and Spanish through the Office of Financial Education: _[www.financialeducation.citigroup.com](http://www.financialeducation.citigroup.com/)__ _
- Seminars on other topics including homeownership and small business development
- Technical assistance focused on building program capacity delivered through our Financial Center, Community Relations and business staff
- Employee volunteers and Board representation
- Support of local forums to provide education about IDAs

## IDA Program - Benefits to Citigroup

- IDA programs help us:
- Reach our goal of being the “Bank of Choice” for the unbanked and underbanked
- Deepen relationships with non-profit leaders by helping their clients achieve self-sufficiency
- Develop better bank customers, as people receive financial education and can make more informed decisions about their finances
- Expand opportunities to provide “best in class” financial mainstream products and services such as affordable mortgages and small business and education loans
- Achieve “Outstanding” CRA ratings

## II. IDAs – Potential and Limitations

## IDAs – Potential to Bring More Customers into Mainstream Banking

- Formal research concerning the movement of IDA customers into other banking products is in its infancy.  No definitive conclusions have been drawn on its potential scope.
- However, anecdotal information indicates that IDA customers are beginning to utilize other banking products, including:
- Checking accounts
- Additional savings accounts
- Mortgage refinance
- Other cross-sell products may include:
- College savings 529 plans
- IRAs
- Mutual funds
- Life insurance

## IDAs – Limitations

- Despite their potential, we have only achieved moderate financial success with IDAs.
- The limitations that Citigroup has encountered with IDAs are primarily due to the decreased availability of matching funds for IDA accounts.
- Relatively few organizations offer IDAs.
- Few account holders in each program
- Limited capacity of our partners to handle this additional volume

## Conclusion

- Our goal is to help make a difference in our local communities and help people make informed decisions concerning their finances.
- IDAs are one tool that helps Citigroup accomplish its goal.
- Thus far, our experience with IDAs indicates that they have the potential to bring more unbanked and underbanked customers into mainstream banking but they are limited.
- We continue to work with partners to develop profitable products that enhance the ability of LMI populations to build and retain assets, and IDAs are a central part of that strategy.