University National Bank in St. Paul has developed two programs designed to help low- and moderate-income neighborhood residents become comfortable with using a bank for their financial needs.
When Franklin Bancorp. purchased the bank two and a half years ago in a culturally diverse, economically stressed neighborhood, one of the first things management did was to also buy the check-cashing store down the street, move the service into their lobby and reduce the fee schedule. The goal was to get those check-cashing customers into the bank and eventually to open an account. Since that time, on average a new checking or savings account is opened each week, says David Reiling, the bank's business development officer. The bank also has made a few auto loans to these new customers. "It's all about breaking down the fear of banks, establishing relationships," Reiling says. "Our customers have traditionally functioned in the 'cash is king' world," he adds.
The second program to create new customers is a pilot in cooperation with the community activist group ACORN. University National offers a new account with lower account service fees and lower overdraft charges, and at the same time ACORN counsels the accountholders on how to manage their financial affairs better.
"Our goal is to get more low- to moderate-income people into mainstream banking rather than having them use check cashing services," Reiling says. Since the accounts were first offered in May, the bank and ACORN have enrolled 25 to 30 people.
"We believe in second chances, but we don't believe in third chances," Reiling says. The bank expects the new customers, through counseling, to learn how to manage their finances, and then to "manage their money like everyone else." And those new bank accountholders who receive government benefits will be ready when the U.S. Treasury begins electronic delivery of all payments in January 1999.
—Kathy Cobb
