1. The Future of Financial Inclusion in the U.S. A Supply/Demand linked approach June 2, 2010 Brandee McHale Chief Operating Officer Citi Foundation

2. The Financial Inclusion Formula 2 What is the right balance? Influencing consumer behavior via incentives Influencing behavior via financial education Mainstreaming via marketing and social networking “Involuntary” demand Influencing consumer behavior via incentives Influencing behavior via financial education Mainstreaming via marketing and social networking “Involuntary” demand “Private Banking” via community based Intermediaries New Technology (Mobile, Universal ID systems) Link to public and private income payments Link to retailers “Private Banking” via community based Intermediaries New Technology (Mobile, Universal ID systems) Link to public and private income payments Link to retailers Appropriate and affordable transactional products Availability of credit Savings as a gateway Deeper understanding consumer preferences and market segments Appropriate and affordable transactional products Availability of credit Savings as a gateway Deeper understanding consumer preferences and market segments Supply Demand Access

3. $3 million, 3-year project to track financial behavior of low- and middle-income consumers Research led by New York University’s Financial Access Initiative, Center for Financial Services Innovation and Bankable Frontiers (http://www.portfoliosofthepoor.com/book.asp)http://www.portfoliosofthepoor.com/book.asp Lessons Learned from Portfolios of the Poor –Bangladesh, India, and South Africa –The poor are highly sophisticated financial consumers and need appropriately designed and priced products New US version Co-funded by Citi Foundation and Ford Foundation U.S. Financial Diaries Project New insights into supply and demand issues 3

4. U.S. Financial Diaries Project 4 Key Activities Site Selection –African-American, urban (New York City) –Hispanic, immigrant, urban (San Jose, California) –White and African-American, rural (Mississippi) –Mixed race and ethnicity, suburban (Ohio, Kentucky) Household Selection (300 families) –Family structure –Family lifecycle stage –Industry of employment –Level of asset wealth and indebtedness –Financial services usage –Education level –Health insurance coverage Site Visitation Frequency and Interview Questions –Bi-weekly –Cash flows, financial instrument use, social networks, other key information

5. Knowledge Building Goals 5 One size does not fit all, but can some standard sizes fit many Opportunities to integrate delivery into existing public and private delivery channels Need for new private sector products Role of nonprofits intermediaries (relationship or commodity) Influence of financial education Understanding, creating,and influencing norms