Academic journal article ABA Banking Journal

The Community Bank Incubator: Unbanked Customers: Armed with Insight and Tailored Educational Outreach, These Banks Are Catering to Nontraditional Customers That, in Turn, Boost Their Bottom Lines

Academic journal article ABA Banking Journal

The Community Bank Incubator: Unbanked Customers: Armed with Insight and Tailored Educational Outreach, These Banks Are Catering to Nontraditional Customers That, in Turn, Boost Their Bottom Lines

Article excerpt

FOR HARBORONE BANK in Brockton, Mass., building trust within the community's immigrant population saw many positive results. In 2007, against the backdrop of a foreclosure crisis, the bank converted 11,000 square feet of its former headquarters into a multicultural banking center called HarborOne U-Brockton, offering financial literacy classes in multiple languages, as well as U.S. citizenship classes.

Thousands of volunteer hours have been logged by HarborOne staff teaching the approximately 7,000 attendees that have taken advantage of the various class offerings. In turn, those attendees have made $10 million in deposits and borrowed $35 million in business and personal loans.

Recently, the bank's small business team also began teaching financial management curriculum to microbusiness owners. A second HarborOne U location has opened in nearby Mansfield, focusing on female business owners and entrepreneurs. Graduates of the classes are eligible for a business loan of up to $5,000 that can be expanded to a $10,000 line of credit.

BankPlus, a $2.5 billion community bank in Mississippi that won a 2015 ABA Foundation Community Commitment Award, provides small-dollar loans to consumers who use payday lenders or other high-interest, alternative lenders. The bank's "CreditPlus" program gives borrowers with a credit score of 550 or above the opportunity to get loans of up to $1,000, while those with a score of 549 or below can borrow up to $500. The loans have a repayment term of one or two years and a low 5 percent APR. The bank requires six months of continuous, verifiable income, attendance at a bank-sponsored financial literacy seminar and two forms of identification. When the first loan is repaid, customers have the option of applying for a second loan. Since the program's inception, the bank has made nearly 23,000 loans totaling more than $17 million. …

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