ABA Banking Journal - September 2007 - (Page 29)

The hip hop dancer in the midst of KeyBank’s multicultural mural dramatized the institution’s intent to strike out in a new direction in serving the unbanked. of the “unbanked” Tescher points out, for instance, that some think the unbanked market doesn’t want technology. But she says evidence is strong that young unbanked people like, and may even prefer, technology for some purposes as much as their banked contemporaries. Add to that religious issues. Somalian followers of Islam who emigrated to Minnesota, for example, are barred by faith from payment or receipt of reba (interest), and so can’t use many conventional banking services. Nevertheless, there are some ways that banks can work with Muslims within their law, as an article in the digital edition shows. Washington has a poor record in product design (think of the All-Savers CD) but that doesn’t keep it from trying to devise products and legislate how the market reaches out to such customers and prospects. Case in point: FDIC’s small-dollar loan program blueprint, published for banks’ potential adoption earlier this year. Banks that take part in the two-year pilot may be given Community Reinvestment Act credit. “I haven’t found a banker yet who says that they can offer that product, as outlined by FDIC,” says Wayne Abernathy, ABA’s executive director for financial institutions policy and regulatory www.ababj.com/subscribe.html affairs. “You can’t offer a product like that profitably.” It’s not that the industry isn’t trying—and succeeding—in serving the previously unbanked, Abernathy says. “We’ve made tremendous inroads in bringing people into the mainstream,” he says. FDIC’s Chairman, Sheila Bair, has made the unbanked and underbanked a key focus of her agency. The most recent Quarterly Banking Performance report, once strictly a statistical product, came packaged with a special report: “Individual Development Accounts and Banks: A Solid ‘Match’.” The title is a play on words for the funding of these starter accounts by matching payments. Many banks are reaching out to the unbanked, often by breaking out of mainstream thinking and by taking a fresh look at things. In the following report we present case studies of some of those efforts. One thing to keep in mind. These banks have all taken the view that serving the unbanked is not a matter of charity nor strictly of compliance, but ultimately, a matter of good business. Perhaps Jennifer Tescher puts it best. She believes a bank can be both profitable and responsive. In the end, a program has to be both. “If it’s not,” says Tescher, “it’s just a nice pilot, a nice Community Reinvestment Act effort.” ABA BANKING JOURNAL/SEPTEMBER 2007 29 http://www.fdic.gov http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - September 2007

Contents Editor's Column Briefing: Why Money Sense is a Top Priority Briefing: Sleight of Mind Briefing: Snapshot: What the First Half Tells Us About the Second Half Briefing: ABA Resources ABA Chairman’s Position Briefing: Get Away and Get Ahead: ABA's Banking Leaders Forum Community Banking: Trim the Fat: Winning the "Battle of the Buck" Community Banking: Pass the Aspirin Cover Story: Meeting the Challenge of the "Unbanked" Bank Marketing: Don't Miss the Boom! On the Job: Time to Power Up Your Presentations? Insurance Sales: The Art & Craft of Cross Selling Tech Topics: The Price is Right? Tech Topics: Security: Protect Information First Tech Topics: Hackers for Hire? You Bet'cha Tech Topics: Case in Point: Tellers Scan, Too, at First Federal Compliance Clinic: Adverse Action Clarified The Economy Banker’s Mart To Advertise/Index of Advertisers

ABA Banking Journal - September 2007

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