By Deb Stewart
As we take stock during National Financial Literacy Month in April, let’s take a quick pulse check on how Americans are doing in the area of financial wellness.
According to the Financial Health Network, fewer than one in three Americans were “financially healthy” in 2019, even as the economy continued to grow and unemployment reached a 50-year low prior to the coronavirus pandemic. The percentage of Americans who can pay off all their bills on time did rise 2.2 points, but people are setting aside less money in short-term savings—with 12 percent saying they have less than one week of living expenses saved in 2019, up 1.4 points.
Consumers who lack financial wellness can face bodily health challenges too, especially for women. More than one in five women say their finances cause them a high amount of stress in 2019, compared with 13.2 percent of men. These findings illuminate many opportunities for banks to help individuals focus on their financial wellness.
But to paraphrase Tolstoy, each financially unwell family is unwell in its own way. Here are five stories of how banks of all sizes are tackling these challenges in tailored ways that reflect the diverse financial education needs of different demographics and customers.
Incarcerated women preparing to reenter society
1st Security Bank of Washington
Seattle police detective Kim Bogucki worked with Girl Scouts whose mothers were incarcerated, trying to engage with those moms and other female inmates, figure out why they were in prison and make sure they didn’t go back upon release.
“If there was something someone could have said or done that would have changed the path that led you here, what would it have been?” she asked. Twenty-five prisoners submitted letters in response to that question. Women who had been in and out of prison before consistently noted that resources available when you get out are not sufficient for the transition—and that is when the IF Project was born, bringing together resources in housing, jobs, finance and many others.
“Members of our executive committee visit the prison four times a year and meet with women who have less than six months left in their sentence,” explains Joe Adams, CEO of 1st Security Bank in Mountlake Terrace, Washington. “Many of these women have been in prison for a long time. We work with them one on one to look at their credit scores.”
Inmates are commonly identity fraud victims, Adams adds. “We can start them on the repair of their credit, but it’s challenging to continue the process if the inmate doesn’t have someone on the outside to help them or if they can’t earn computer time on the inside as a special privilege.”
In addition to credit repair, 1st Security volunteers focus on budgeting using mock budgets for a job earning $15 an hour. What does it mean if you live alone, if you share expenses? Are there opportunities to save for a car or apartment if you live with family or friends for awhile? Some have never seen or used a smartphone. What do they cost?
“We’ve come to believe that these women deserve a second chance,” says Kelli Nielsen, EVP for retail banking and marketing. “It’s important for them to have family and friend support that can help them get some wins when they’re released. Otherwise it’s really easy to slip into old habits.”
Seniors uncomfortable with digital banking
Capital One Bank
Ready, Set, Bank is a series of 44 micro-learning videos from Capital One designed to equip seniors with the basic skills to manage their money and bank online. The series is a generic, non-branded instruction tool developed specifically for seniors. The video tutorials, accessible on an easy-to-use and engaging platform, help older adults learn basic online and mobile banking skills, such as how to navigate mobile banking apps, set up alerts about account activity and protect their identity from fraud. Viewers can watch the entire series or select individual videos to learn new skills.
Capital One convened partners who are experts in the fields of digital learning and seniors and technology to develop Ready, Set, Bank and ensure that it is easy to use, engaging and relevant to seniors at any stage of digital adoption. The bank supports a network of nonprofit organizations across the country to use the curriculum to teach seniors how to bank digitally. Partners—including OATS, Tech Goes Home, Mercy Housing and North Westside Housing—bring this content to seniors. Capital One has also partnered with the American Library Association to bring Ready, Set, Bank to public libraries across America, including in Houston and New York City, with New Orleans, Washington, D.C., Miami, Los Angeles and more coming this year. Additional ALA partnerships will launch rural library programs that will couple Ready, Set, Bank workshops and lending programs. And Capital One employees deliver this curriculum directly to clients in partnership with these non-profits. So far in 2019, bank staff have served more than 500 clients in seven states directly.
Migrant farm workers
ChoiceOne is a 14-branch community bank in an abundantly rich agricultural region in West Michigan. It was founded by farmers 120 years ago and serves hundreds of locally owned farms growing apples, blueberries, peaches and other crops. Many of these farms employ seasonal help from Central and South America, resulting in an influx of largely unbanked, Spanish-speaking consumers.
Local farmers struggle to find fast ways to pay these employees. Paper checks were a common way to pay, often cashed at check cashing facilities. This resulted in employees paying high fees and keeping large sums of cash, compromising their safety when crossing the border to return home.
ChoiceOne Bank saw a real need to help farmers pay these workers and find a safe way for workers to get money to their families. Their solution came in three parts: checking accounts and prepaid payroll cards with reduced fees as safe, secure ways for employees to be paid with minimal fees; financial education delivered in Spanish; and Spanish-speaking customer service
“The foundation of financial literacy with this group is establishing trust,” says ChoiceOne COO Adom Greenland. “They’ve learned that our fees are better than check cashing. And the ability to withdraw smaller amounts of money prevents potentially dangerous situations. The story of safety and convenience is taken to the farms with thorough presentations on using checking accounts, prepaid cards, ATMs and other basic banking products.” Thousands of workers have now participated in the checking and prepaid account programs.
Meanwhile, ChoiceOne provides education sessions for the farm workers post-harvest. More than 100 laborers generally attend. Employees began asking for language and culture training, and voluntary after-hours Spanish classes are now offered once a year. These focus on how to get through a transaction with limited Spanish and understand cultural attitudes.
“We see these employees doing transactions in Spanish and going beyond transactions to learning new words with their customers and getting to know them in new ways,” observes VP and CRA officer Patricia Brown.
These initiatives have been building for several years. “An important lesson for us is to be in tune with our customers, listen to what em-ployees are asking for and be creative with our solutions,” says Greenland. “With our vision to be the best bank in Michigan, becoming more empathetic allows us to become an even better bank.”
“People who start a business are usually good at something. They’re great bakers or electricians or another skill. But the most important thing as your business grows is to be good at business,” says Glynn Lloyd, executive director of the Foundation for Business Equity. Boston-based Eastern Bank provided initial funding and support, and the foundation is now partnering with and seeks other funders.
FBE focuses on building an ecosystem of support to help black and Latino business owners grow their businesses. The program helps these firms access growth capital; large corporate and public contracts via supplier diversity programs; and strategic advice and mentoring, including on technical operational challenges like supply chain management and pricing. FBE’s target is businesses at the $800,000-and-up revenue level. These firms have generally been in business for five to seven years. Groups move through the 12 month program in cohorts of five to 10 businesses. Four cohorts and 40 businesses have moved through the program since 2017. In addition to FBE’s ecosystem of support, participating businesses get help with organizational development, financial management, marketing, operations and advisory boards.
FBE is sector-agnostic, says Lloyd. “We see more community businesses with lower barriers to entry express interest in our approach. A great example is DRB Services, a facilities services business. They came in with $10 million in sales and a goal to double. We worked with them to bring in a COO/CFO, which the strategic adviser strongly recommended. They received capital from the growth capital fund that enabled them to hire and recruit for key roles to help get it to the next stage of growth and expansion. We worked with them to secure a large contract in the healthcare sector. The business owner achieved all the key milestones and growth is right on track.”
Eastern is an innovator in this space, dedicating dollars and capital to help address the wealth gap by helping minority-owned businesses grow. Lloyd challenges other banks to learn from this model to not just grow businesses but to shrink the racial wealth gap in the U.S.
Families affected by medical hardship
When someone receives a cancer diagnosis, he or she faces issues well beyond the medical treatment. Regions invests time, talent, and resources to help families affected by medical hardship maintain financial stability. The bank works with American Cancer Society chapters to provide financial education training of patient navigators so they in turn can help patients and caregivers be better prepared, as well as equipping the National Cancer Information Center with a list of Regions Bank locations that representatives can use to connect callers seeking financial guidance with the branch resources nearest them.
Many tools are available to branch associates to address difficult topics. In fact, many were conceived and developed by a Regions employee who had cancer and underwent her own medical hardship. These resources include worksheets for developing a changed personal action plan, a legacy planning checklist, a surviving spouse checklist and a Regions Next Step podcast featuring an associate sharing how she used the above resources to take control of her financial legacy when she was faced with the diagnosis of a terminal illness.
“There are so many fantastic literacy initiatives across our footprint,” says Michele Elrod, chief marketing officer at Regions. “We have an incredible library of financial wellness educational materials that have been developed for various audiences and needs. They include podcasts and webinars, multilingual pieces, every format and topic imaginable.”
Deb Stewart is a frequent contributor to ABA Bank Marketing.