Community banks in Massachusetts & Tennessee do good and reap unexpected rewards
At BankMarketingCenter.com we’re big proponents of building financial literacy among community bank and credit union customers. Critics who may contend that financial education, while a community positive, doesn’t do much for an institution’s bottom line.
But as American Banker reported a couple of weeks ago, a bank in Brockton, Mass., has demonstrated that doing good can reap unexpected bottom-line benefits.
First, some background: As a result of the subprime mortgage crisis, Brockton had the most foreclosures of any city in Massachusetts. Contributing to this dubious distinction: Many of the victims scammed by these expensive loans were immigrants to this blue-collar town who didn’t understand what they were signing. In fact, many of these people might have qualified for more affordable mortgage options.
“All of the documents were in English, so they didn’t necessarily understand what they were signing, Maureen Wilkinson, a vice president of community education and the Community Reinvestment Act officer at a Brockton bank told American Banker. “It’s sad to know that these folks, if they had just been armed with a command of the English language and some understanding of the basics of finance, they may have been able to avoid the losses they sustained.
The foreclosure crisis in Brockton was hard business to be sure – “wicked hard” they might say there – but for the Brockton bank, a former credit union that became a mutually-owned cooperative bank in 2013, crisis became opportunity. In 2007, the bank opened a multicultural banking center that provided classes not only in personal finance and the basics of home ownership, but English as a Second Language and citizenship test preparation.
Consider the benefits as a result of its two centers. The first opened in Brockton in 2007 and in Mansfield, Mass., in 2010:
- Number of Attendees: 13,700
- New Accounts Opened: 5,129
- New Deposits: $25 million
- New Loans: $63 million
- Annual Revenue Impact: $2.5 million
Source: American Banker
What did the bank do to make this happen?
- Commitment: The bank budgeted $500,000 and converted unused space in two of its headquarters buildings into classrooms. Each building houses a branch.;
- Teamwork: The bank partnered with nonprofits to provide the ESL and citizenship test prep.
- Consistency: Classes twice a year won’t accomplish Brockton-style results.
“Some banks, they want to add this to the marketing person’s long list of responsibilities,” Wilkinson told the magazine. “They might be doing two seminars a year and expect to get the same results we are. There’s no way they are going to do that. There are four of us on staff and we are immersed in this program. We have 10 to 12 classes a month. It’s not a brown-bag lunch seminar that we do once every six months.”
- Beyond-the-bank benefits: “We know there are people in our communities who have never taken our classes who are banking with us because of our outreach,” Wilkinson told American Banker. “They have told us, ‘We are giving you our business because you give back to the community.”
- Thinking long term: A Memphis, Tenn., community bank has opened a 700 credit score class, helping attendees –with an average 581 score – build credit.
“They may have a checking account with us, but we can’t do a car loan for them; and that’s a conversation bankers don’t like to have, said bank senior vice president and retail delivery manager Tammy Locascio told American Banker. “Now we can say, ‘The answer is “no” today, but we have a program that you can go to so we can say “yes” to you in the future.’ A 700 credit score just opens so many more doors.”
- No hard-sell here: It’s not about selling products. In fact, the Brockton bank offers courses on student loans and reverse mortgages, two hot-button money topics, even though those products aren’t offered by the bank.
According to Wilkinson, her bank’s successful financial literacy effort is about improving lives, not building business.
“We want to develop a relationship before we ever handle their money,” she said.
It seems the Golden Rule – treating others as we’d like to be treated – is alive and well in Brockton, Mass., and Memphis. Helping others, regardless of their balance sheet, is the heart of the matter.
Read the full American Banker article HERE.
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Here’s another great article about a bank that’s sharing customer success stories.
