A few miles Northeast of Downtown Los Angeles is Lincoln Heights, a working-class neighborhood that belies the city's glamorous image. About 70% of the residents are Latino, and the rest are mostly Asian-American. While there are a few early signs of gentrification — like the craft beer shop that opened two years ago — the median household income is barely half of the citywide average.
On a cool morning in early March, the hills near Abraham Lincoln High School were a lush green — the result of an exceptionally rainy winter, and a jarring sight after several years of drought. The high school, which dates back to the early 1900s, is in need of a similar rebirth. It currently has about 1,000 students, more than a 50% decline from a decade ago, as charter schools have moved into the neighborhood.
Lincoln High is an unlikely place to find a bank branch. But just off the cafeteria, inside what used to be an adult-education office, is a small outpost of MUFG Union Bank. Amid alarm bells and intercom announcements, the familiar logo of the Federal Deposit Insurance Corp. offers a reminder that this is a real bank.
The branch is operated mostly by 12th graders, who take deposits from their classmates and teachers. They also make classroom presentations on financial topics and pitch bank accounts to their fellow students.
Priscilla Ortega, who is planning to attend Fresno State University in the fall, juggles her part-time banking job with classes and softball practice. She said that the experience has bolstered her self-confidence.
"Before I would get really nervous, but now I feel more comfortable talking to people," she said. "I wish I would have learned all this stuff my freshman year."
This branch is one of five that Union Bank operates inside California high schools. The $115 billion-asset, Los Angeles-based bank has several goals for the program.
It wants to motivate the students, many of whom come from low-income families, to go on to college. It aims to give them presentation skills that will serve them well no matter what career path they pursue. And it hopes that the students' improved financial literacy, and their understanding of the importance of savings, will filter across their communities.
"I sometimes talk about it like the pebble in the pond," Jan Woolsey, a managing director in Union Bank's corporate and social responsibility division, said in an interview prior to her retirement at the end of April. "We may only directly impact a few students. But through their efforts to share with their peers and their parents and their parents' friends, we actually have a ripple effect that goes way beyond our direct involvement. They can be a trusted voice in that community that we have difficulty being alone."
How it works
Union Bank, a unit of Tokyo's Mitsubishi UFJ Financial Group, started down this path in 2010.
The year before, a student-run branch at a Fresno high school was forced to close as a result of the failure of the $1.7 billion-asset bank that operated it, County Bank in Merced, Calif. Union Bank agreed to continue operating the branch.
Since then, the bank has opened four other student-run branches in Southern California, and it plans to open a sixth, in Oakland, later this year. All of the schools serve communities with a high proportion of low-income families.
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Financial inclusion is not only about the unbanked and underbanked. Increasingly, working class families who have lost factory jobs and those who have full-time jobs but work highly variable hours are forcing banks to rethink how best to help meet their financial needs. Fintech companies are stepping up too.
April 24
The branches are only open during the school year, typically four days a week, from 10 a.m. to 3 p.m., with a manager there to supervise.
Students who want to participate have to apply and typically there are many more candidates than available spots. The bank tries to find a mix of high-achieving students and others who may or may not be headed to college.
About 10 to 13 applicants are selected for a one-year internship program at each branch — all but one so far have interviewed as juniors to work in their senior year.
Over the summer they receive the same two weeks of training that the bank's full-time tellers get, including instruction on customer privacy. One week is spent in a classroom at the training center and another week job shadowing in a traditional Union Bank branch.
"They're taught how to make their customers feel welcome when they come into the branch and appreciated when they depart after a transaction," Woolsey said.
Each student works about four or five hours a week. The branches do not have ATMs, which is by design. Customers are required to talk to a student banker when they want to make a deposit or a withdrawal.
The students receive $250 halfway through their training and another $250 after it is completed, plus a $1,000 scholarship at the end of the school year.
There is no hourly pay, but the teens who participate get much more from the program than some pocket cash.
"None of them really care about the money. They care about the experience," said Wendy Estrada, the branch manager at Lincoln High.
During a recent visit to the school, Estrada proudly showed off photos of the program's last three graduating classes. Part of her job is to help these former students to find internship opportunities during college.
"A lot of them still come by, and they still bank with us," she said.
Estrada sees herself in the kids she is mentoring. She grew up in an immigrant household in Glassell Park — another neighborhood in northeast L.A. — before embarking on a career in banking.
"I wrote my parents' checks," she recalled.
What the benefits are
Union Bank is one of a relatively small number of U.S. banks and credit unions — regulators were unable to provide an exact tally — that operate student-run branches. Capital One Financial runs four of them, in New York, New Jersey and Maryland. Banks can receive credit for student-run branches under the Community Reinvestment Act, which is undoubtedly part of the appeal.
Some critics have argued that these banks are simply using public schools to build their brands with the next generation of young adults. But if that is the motivation, student-run branches would seem to be a costly marketing strategy.
"I can tell you it's not a profit gain," Woolsey said, referring to Union Bank's program. "And we don't do it to make money. But we do it to have an impact on the lives of individuals and the communities they live in."
Jose Torres, the principal at Lincoln High, said that the program has yielded benefits both for participating students and the broader community, which is teeming with immigrants. He noted that many parents of Lincoln students rely heavily on cash.
"A lot of parents don't believe in banks, don't trust banks," Torres said.
Those parents may get an informal financial education from their kids. Parents also have the opportunity to attend regular workshops that Union Bank hosts on financial topics.
Lincoln High's branch opened in March 2014, and the bank said that all of the students who have participated in the program have gone on to college. During the same three-year period, roughly 80% of the student body at Lincoln graduated and enrolled in higher education.
Since 2011, roughly 150 California high-school students have been through the Union Bank program, and virtually all of them have gone on to college. But numbers do not tell the whole story.
"One mother told me at graduation that she was confident that our program had saved her son's life," Woolsey recalled. "She'd lost an older son to the gangs — he was killed as a teenager — and she was fearful that her second son was going down that path. But he got lit up about this program, decided it was something he really wanted to do, and improved his grades."
The program's impact on other teenagers is less dramatic, but still valuable.
Alicia Cortes, who participated in the program at Lincoln High in 2014, was raised by a single mom who did not feel comfortable using banks. Today she attends Pasadena City College, and she said the stipend she got from the banking program helped her pay for her books. The program also educated her about the importance of saving. "I don't want to want to get into any debt," she said.
Ortega, a senior at Lincoln High, plans to enroll at Fresno State University in the fall and major in child development and family sciences. She said that the banking program sparked her interest in personal finance. These days, she comes home from school with questions for her parents about their retirement savings.
Her father, Luis, is a 1991 graduate of Lincoln High who went on to become a Los Angeles police officer.
"I don't ever remember asking my parents about interest rates or CDs or anything like that," he said.
"I just wish this program would have been around when I went to school, because it would have helped me be a little more financially savvy."
