In 2011, San Francisco was one of the first jurisdictions to include social responsibility metrics in the City’s banking request for proposals (RFP). The 2021 banking RFP placed an even greater emphasis on Socially Responsible Banking by including social responsibility metrics in its assessment, selection, and ongoing work with banking partners. Financial institutions interested in contracting with the City must articulate how they have encouraged equitable economic opportunities for local businesses and residents, especially low-income communities and communities of color. The Treasurer’s Office is working with contracted financial institutions, with input from community stakeholders, to:
- Improve the experiences of people with low income, as well as Black, Indigenous, and People of Color (BIPOC) in the financial system; and
- Use community feedback and data to enhance banking and lending products and services to improve the wellbeing of San Franciscans.
Overview of Our Approach
To meaningfully include social responsibility in the City’s banking partnerships, the Office of the Treasurer & Tax Collector (TTX):
- Comprehensively assessed current banking products and services including areas for improvement.
- Developed a request for proposals (RFP) with a robust social responsibility component, informed by interviews with experts and stakeholders, other cities’ responsible banking ordinances and recent RFPs, and other research.
- In evaluating responses to the RFP, gave stronger weight to the SRB component than the previous process did.
- Negotiated contracts with the new banking partners to include a commitment to ongoing improvement in the area of social responsibility.
Throughout the process, TTX prioritized feedback from internal experts, external departments, and community advocates.
Through these efforts, TTX modernized and strengthened the Socially Responsible Banking evaluation process to emphasize:
Community reinvestment products, services, and data analysis
Activities intended to meet local needs, particularly for low-income and BIPOC households and communities.
Want to know more? Continue reading below about San Francisco’s Socially Responsible Banking effort, including details on the RFP process.
Background
The Office of Treasurer & Tax Collector (TTX) is responsible for the tax collection, banking, and investment activities of the City and County of San Francisco. The Office makes extensive use of banking services to collect, disburse and manage its cash, investments, payables, and receivables. TTX has a history of innovating in the banking sector, leveraging banking partners’ technology and expertise to secure more affordable and reliable services for city departments and citizens.
TTX must handle transactions as large as payroll for over 39,000 employees and as small as individual parking meters. San Francisco’s banking partners are crucial to the smooth operation of the City.
The Treasurer is committed to facilitating more inclusive financial services by including social responsibility metrics in its contracts with banking partners. In 2011, San Francisco was one of the first jurisdictions to include social responsibility banking metrics in the City’s banking request for proposals (RFP). Since that time, many other cities have embraced this strategy, as well as municipal responsible banking ordinances. In the 2021 banking RFP, TTX decided to use the contract process to place a greater emphasis on Socially Responsible Banking.
Banking RFP Process
For the 2021 RFP, TTX developed a process that evaluated respondents not just on past and current performance, but also on future commitments to invest in the community and meet the needs of low-income and BIPOC communities.
To develop the RFP, the TTX team first reviewed other jurisdictions’ RFPs and responsible banking ordinances, spoke with experts, community groups, advocates and stakeholders, and did a deep dive into related research. Drawing on these sources, the RFP:
- Set a minimum bar that disqualifies banks promoting predatory or harmful products, services and practices
- Required local data on lending; retail banking; investments, loans, grants; and crisis relief that would not otherwise be available
- Requested community reinvestment plans
- Created a plan to utilize banking contract(s) as a vehicle for improving community reinvestment activities through a collaborative and transparent process.
Seeking to expand its banking partners, the City broke its banking service needs into six modules on which applicants had the option to bid. Ten banks responded to the RFP. Applications included a written response and a virtual presentation.
To evaluate the proposals, the Office of the Treasurer & Tax Collector recruited a panel of SRB reviewers, both internal and external. Together this group had decades of experience in banking partnerships, lending, retail banking, Community Development Financial Institutions (CDFI), the regulatory environment, and related knowledge.
Respondents were evaluated not only on current and prior performance (“what have you done for our community?”) but also on their commitment to strengthening community reinvestment through a community planning process (“what will you do for our community going forward?”). The SRB reviewers evaluated proposals on the following:
- Clarity and transparency
- Understanding of & responsiveness to local needs, especially low-income/BIPOC
- Well-defined and implemented vision to meet these needs
- Specific initiatives (not generalized promises or assurances)
- Targeted, impactful activities and investments (not minimum efforts to meet CRA obligations)
- Policies and practices that mitigate harm to consumers and communities
- Commitment to increase community investments and collaborate with community stakeholders to improve targeting and effectiveness of those investments
SRB scores accounted for 16.67% of each respondent’s first-round score, and 33.3% of the scores for the finalist presentations. This is substantially more weight than SRB was given in the 2011 RFP process. The Environmental, Social, and Governance team also analyzed each applicant for each module; these metrics were circulated to reviewers to inform their final scores.
Three banking partners were selected:
- JP Morgan Chase
- Bank of America
- U.S. Bank
The banking contracts include a process for collecting community input. Future contracts will include a process for banks to report on their progress toward their community reinvestment goals, as noted below.
Community Feedback and Continuing Progress
In partnership with TTX and the Office of Financial Empowerment, the City’s banking partners will seek feedback from community stakeholders about their needs and challenges around financial products and services. Based on this community input, the banks will identify areas of opportunity and set goals to address any gaps and strengthen financial access and inclusion. TTX will work with the City’s banking partners to create a plan for ongoing assessment and improvement.