How to Remove the 'Under' from 'Underserved'
February 23, 2015 11:00 PM
Daunted by the challenge of how your bank can help underserved members of the community? Here are some simple tips and bits of wisdom from bankers, nonprofit leaders and local government officials.
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Understand Your Target Audience
The underserved include the working poor, not just the unemployed and unbanked, John Hope Bryant, the CEO of Operation HOPE, emphasized repeatedly at a recent conference. His nonprofit organization wants to serve as a lobbyist for "poor people... the struggling class and stressed middle class... folks with too much month at the end of their money," he said.
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Don't Work Alone
Banks need to build partnerships with, and among, themselves, local nonprofits, government agencies and specialized players like small business investment corporations , said Tim Wennes, the West Coast president of MUFG Union Bank. When banks have "capital that we want to deploy, and we want to make the greatest impact on a community, we need to go to those organizations that know the community and that also have the skills, competencies and capabilities that we don't have."
Education Starts at Home
Sometimes banks' own employees need the same kind of help as other struggling consumers. SunTrust Bank workers embraced a program the company started in January to promote its employees' financial well-being; it includes incentives for opening savings accounts. "We announced this ... and 90 minutes later, we had 1,000 people sign up," said William Rogers, the Atlanta bank's CEO.
Set Measurable Goals
The goal of Operation Hope's financial education centers is very specific: to raise users' credit scores out of subprime territory, to around 700 points. "Poor neighborhoods that you and I see are 500-credit-card-score neighborhoods" that are targeted by "predatory, nonbank financial institutions," Bryant said. "We create a bank customer" when we raise the score of a person in one of those neighborhoods by 100 to 200 points, he said.
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Practice Forgiveness
Old-school banking may have been wrong when it taught lenders to ban forever a customer who didn't pay a debt, said Kessel Stelling, the CEO of Synovus Financial in Columbus, Ga. "We as a society can't write anybody off forever," he said.
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Capitalize on the Strength in Numbers
Employee involvement in volunteer projects is essential to building a rapport with the community, and good customer service can go a long way toward educating the public about good practices like savings, bankers said.
"A number of our projects require our employees to participate," and they usually enjoy participating once they give it a try, said Joseph Otting, the head of OneWest Bank in Pasadena, Calif. Meanwhile, SunTrust's Rogers praised an employee who helped a customer open a savings account and asked "How did that feel?" when the customer came back and made a deposit.
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Take Time for Mentoring
Sometimes it takes a personal touch. One-on-one mentoring can help young people "change their trajectory for their entire life" and give them to the tools to learn how to better manage their money, said Aja Brown, the mayor of Compton, Calif.
Support Financial Education
"Speaking the language of money is what breaks you free from the expectations of everyone around you," said Monica Mehta, managing principal of Seventh Capital in Houston.
