June 04 2013
American Banker: SunTrust to Woo the Underbanked with In-Branch Financial Advisors
Originally published here.
by Chris Cumming
SunTrust Banks (STI) is teaming up with a nonprofit in a novel effort to reach the underbanked.
The Atlanta company is expected to announce Tuesday that it plans to put financial counselors in its branches as part of a pilot program with Operation HOPE, a nonprofit that works to provide financial literacy training to low-income families. The financial counselors will provide services including credit-repair counseling, entrepreneurship training, tax advice and help getting out of debt.
SunTrust will begin the pilot program this fall at two selected branches in Atlanta and Memphis, with the goal of expanding to more locations and more branches if it's successful.
Along with providing a wider range of services to the underbanked, SunTrust hopes the program will help non-customers improve their finances to the point where they can become traditional banking customers. SunTrust has pledged $1 million to fund the project, called HOPE Inside, which will go toward training and paying the counselors and providing them the space to work in the branches, says Dan Mahurin, who oversees SunTrust's philanthropic and volunteer initiatives.
"There are segments of the communities we serve that have difficulties with things like credit repair and services that banks don't usually provide," says Mahurin. "We will be offering our services and the counselors will be offering theirs. We think the services work well together."
Banks have tried many ways of reaching the estimated 37 million Americans without bank accounts. Some, such as KeyCorp (KEY), Regions Financial (RF) and Wells Fargo (WF) have set up offices where non-customers cash checks, while others, like BB&T (BBT) and U.S. Bancorp (USB), have offered prepaid cards as an alternative to checking accounts. Some banks have begun offering alternative checking accounts that mimic prepaid cards.
SunTrust's approach is more long term. The idea is "to get the struggling borrower to the point where they're bankable," says John Hope Bryant, the founder of Operation HOPE. Bryant thinks the program will allow banks to build goodwill while developing new customers.
"It's a merger between the business agenda and the philanthropic agenda," he says. "The bottom line is that a bank's job is to make money. This program aligns our mission with the bank's mission, and that's why we believe it's sustainable, it's reputable and it's scalable."
SunTrust is the first bank to place financial counselors in its branches through the HOPE Inside program. Six years ago, several California banks, including Union Bank of California and Bank of the West, participated in an earlier version of the program, in which Operation HOPE's counselors were placed near the branches, said Bryant.
The nonprofit has the ambitious goal of expanding the HOPE Inside program to over 1,000 branches in the next five years. It is in negotiations with several other regional and national lenders about placing counselors in their branches, Bryant said.
The $172 billion-asset SunTrust has been a longtime supporter of Operation HOPE, and helped fund the nonprofit's Atlanta headquarters in 2010. The nonprofit works to direct private capital to the needy, and its other projects include efforts to help people improve their credit scores.