Hanmi Financial in Los Angeles has rolled out a checking account with a token minimum deposit and few fees — including no overdraft fees— in partnership with a group that provides emergency loans, counseling and other financial tools to low- and-moderate-income workers.
The $7.1 billion-asset Hanmi realizes its new Choice Checking account, which it is offering to clients of Los Angeles-based HoneyBee, isn't going to generate much in the way of fee income. The account is "virtually free," Chief Banking Officer Anthony Kim said. The goal, according to Kim, is to enhance Hanmi's Community Reinvestment Act program.
Choice Checking, which Hanmi unveiled Oct. 26, "aligns with our [CRA] efforts, providing accessible banking to underbanked communities," Kim said. "That's how we got attracted to HoneyBee."
Beyond that, the partnership with HoneyBee harks to Hanmi's roots, which involved serving unbanked communities, most prominently recently arrived Korean small-business owners, Kim said. Many of those Korean entrepreneurs operated without checking accounts because banks in South Korea did not offer them, according to Kim.
"People had no knowledge of the U.S. banking system," Kim said. "They were not aware of the availability and accessibility of credit. … Hanmi served as a steppingstone in terms of providing guidance and helping the community."
"Today, we serve all communities while continuing to create products and services that meet the evolving needs of unbanked and underbanked communities," Hanmi President and CEO Bonita Lee said in an Oct. 26 press release.
Many of HoneyBee's clients are unbanked or underbanked even though they hold down jobs, said Ennie Lim, a co-founder and CEO of the group. "Most of these people had gone to payday lenders in the past," Lim said.
HoneyBee "had been talking to banks for quite a while" before linking with Hanmi," Lim said. "The conversation with Hanmi just fit. They loved what we were doing [so] we were able to progress relatively fast."
For Hanmi's part, Kim said the bank was "looking for a nonprofit that teaches financial literacy," which is an integral part of HoneyBee's operating model. In addition to zero-interest emergency loans, Honeybee offers one-on-one counseling to clients on subjects ranging from saving for retirement or boosting credit scores to buying a car or home. Lim describes the sessions as "financial therapy."
Hanmi requires a $25 deposit to open a Choice Checking account. It charges a $4.95 monthly maintenance fee but waives it with one online deposit per month. The account, which has no geographic restrictions, is also enabled for online and digital bill payments.
Ken Thomas, founder and CEO of Community Development Fund Advisors in Miami and an authority on the Community Reinvestment Act, said Hanmi's Choice Checking account would likely be viewed as a "good-quality" community service program and would almost certainly boost its CRA standing. The magnitude of the benefit will be determined in large part by the number of individual accounts Hanmi opens, Thomas added.
Hanmi plans to offer Choice Checking to customers of its branch network in addition to HoneyBee clients.
Hanmi is launching Choice Checking as a growing number of banks are
Beyond its CRA goals, Hanmi is hoping Choice Checking serves as a rung on the economic ladder, helping clients achieve greater prosperity for themselves — and the bank.
Kim, noting thatd he started his banking career in the Koreatown district of Los Angeles, said: "I've seen a lot of people start businesses with a couple hundred dollars. They start a small business. They expand and they develop into" much bigger companies.
