A New York state program to bring banking services to neglected areas is a microcosm of the industry's problems in courting underbanked consumers.

Since 1999 the New York State Banking Department has offered tax breaks, below-market-rate municipal deposits and other incentives to banks that set up branches in underserved neighborhoods. So far, 38 branches in the state, including 25 in New York City, have qualified for Banking Development District, or BDD, status. Participants have ranged from national companies like Citigroup Inc. and Capital One Financial Corp. to small, local institutions.

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