Modeling a program of outreach to unbanked residents after one that achieved success in San Francisco, Old National Bancorp CEO Bob Jones did the city of Evansville, Ind.,  one better, by handing over a senior executive to help with the early spadework. “Bank on Evansville” was announced in August and should go live in the first quarter 2009, allowing residents who have relied on alternative financial services from check cashing facilities and the like the chance to open a “Second Chance” checking account at area banks.

Bank on Evansville, which will be run for a time by Old National human resource executive Patty Avery, will involve more than ten banks in the community, including Fifth Third Bank, Integra, and Evansville Commerce Bank as well as some area credit unions.

That she has been loaned to the City of Evansville Avery credits to the instincts of her boss. “Bob knows we’re a small city and that we don’t have a lot of city workers to spare,” Avery says. She also notes that although her day-to-day involvement in Bank on Evansville is expected to span less than a year, the program is already being thought of as merely a starting point. “Our community organizations and participating banks are excited by the idea of getting more people into the banking system,” Avery says, pointing out that an estimated 6,000 community members don’t have bank accounts at this time.

Making banking feasible
“I’m really happy to be involved in this program,” says Avery. “I was a single mother at one point and I know how much of a difference $75 a month can make.” That is the typical monthly cost of using check cashing services.

“We will be packaging these accounts, which will cost between $5 and $8.50 monthly, with an education session to get account openers familiar with how the account works and what their responsibilities are,” she says.

Those who are interested in the program merely show up at a participating bank to open an account. (In California, banks are accepting the Mexican Matricula Card or Guatemalan Consular ID card in lieu of a California State ID. The Evansville banks hadn’t finalized identification details as of this writing.)

Account holders will have one opportunity to bounce a check without getting charged. “We intend for it to be a teachable moment,” says Avery.

Based on how well the Second Chance account performs in the Evansville market, Avery anticipates the participant banks will offer other types of products, including personal loans.

California program expands
“Bank on San Francisco,” the program  on which Old National modeled its program, has been in place for two years and has signed up 20,000 new account holders. Participating banks include Bank of America, Citibank, Bank of the West, and Union Bank of California. The program has  now gone statewide. Account features in the original San Francisco program include a remittance product called SafeSend, a direct deposit product, and a free Bank of America check card. A great number of the California accounts have remained in good standing, Avery notes.

The Old National executive says she read the work on unbanked citizens written by Matt Fellows of the Brookings Institution, and around the same period discovered the San Francisco program during a routine online search. This prompted her to bring the idea of doing something similar to the attention of Old National’s CEO.

“Bob said, ‘do the research’,” Avery says. She read up on the San Francisco project and did some initial outreach within her community to secure some interest. Getting involved with an organization called National League of Cities as well as the Center for Financial Services Innovation helped to seal the deal. She adds that she’s met some terrific people working on the project, including Leigh Phillips with San Francisco’s Office of the Treasurer, who she describes as “a brilliant community organizer.”

Avery says that her bank has long been involved in philanthropy but that Jones especially liked the idea of doing something beneficial for those in need that also leveraged the core value of banking.

Because many thin-file banking prospects prove to be solid credit risks, Avery believes the Bank on Evansville program will do well despite recent subprime woes.

“It’s a mistake to think that everyone who doesn’t have a bank account is a poor risk,” she says. “We anticipate that the program will attract a lot of good banking customers.” BJ

 

The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj1208/index.php?startid=30

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