A Mississippi city’s collaborative financial literacy effort
By William Atkinson
Several community banks are banding together in Hattiesburg, Miss., with local officials and nonprofit organizations along with other area financial institutions to promote banking and financial literacy services to people without mainstream financial services.
Called the Bank On Hattiesburg Initiative, the grassroots program provides financial literacy education in particular while promoting the advantages of mainstream banking services in general. It is the first program in Mississippi undertaking such a broadly collaborative and coordinated approach to financial literacy among mainstream financial institutions. Nationwide bank chains, regional banks and credit unions are part of the effort along with a half-dozen community banks.
“The initiative is designed to make opening a bank account and developing a bank relationship as easy and stress-free as possible by offering low-cost products and having access to financial education,” explains Wes Rouse, the Hattiesburg market president for Magnolia State Bank, a $315 million-asset community bank participating in the joint effort.
Concerned that many local residents were becoming captive of high-cost nonbank financial service providers, officials with the city of Hattiesburg jump-started the initiative after learning about similar programs in Alabama and San Francisco. “The initiative got started because of so many people going to payday loan and other businesses that were charging them up to 33 percent,” says W.H. “Willie” Macko, president of the Hattiesburg division of PriorityOne Bank, a $570 million-asset community bank participating in the initiative.
“We did not like the number of checking-cashing businesses and payday loan companies that were taking advantage of our underbanked community,” Rouse adds. “We wanted these customers to realize that they have another option.”
Since the first spark of the idea four years ago, the initiative officially launched in October, where local nonprofits offer impartial financial and money management knowledge and financial institutions deliver the affordable products. The program’s financial literacy component teaches people how to manage a checking account, stay on a budget and start saving for the future.
The local United Way plays a major coordinating role in the financial literacy initiative, and the other nonprofits involved include religious ministries; food, housing and clothing assistance charities; and social-service and health-care providers. The major role of the nonprofits is to promote the Bank On Hattiesburg program and refer people to the financial institutions involved.
“Our local nonprofits help get the word out and reach the underbanked population,” Rouse explains. “They are our educators and referral sources.”
While the community banks and the other participating financial institutions want to be the ultimate destination for people seeking mainstream financial accounts and relationships, the nonprofit organizations deliberately serve as the first “gateway” access points for the individuals and families Bank On Hattiesburg is serving.
“A stronger, more educated community benefits everyone.”
—Wes Rouse, Magnolia State Bank
“Individuals may not be comfortable walking into bank settings,” says C. Jerome Brown, senior vice president and director of community development for The First–A National Banking Association, a $1.2 billion-asset community bank operating 31 retail offices in Mississippi and Alabama. “They may be a little intimidated. The nonprofits are the agencies that individuals trust, and they serve to support many low- to moderate-income individuals.
“Naturally, they will make the individuals feel more comfortable and aware of the Bank On effort.”
What the banks do
The requirements for the financial institutions participating in the initiative are to meet the program’s Bank on Hattiesburg product standards. The financial institutions involved must offer no-cost or low-cost accounts; waive monthly balance requirements; issue free ATM and debit cards; and provide free online banking and low initial deposits. Some of the institutions involved also will offer financial education in conjunction with local nonprofits.
With the initiative, for example, Magnolia State Bank is promoting its existing free checking account with a debit card and online banking access. “We also offer one-on-one training on budgeting and balancing account balances,” Rouse says. “All a person needs to do to qualify is walk in and say they would like a Bank on
Hattiesburg checking account.”
But Brown points out that the initiative doesn’t really change what community banks have been doing all along. They have always offered no- to low-cost products and services. As a Community Development Financial Institution, The First already has a mission of serving the underserved, so it was a natural match for the bank’s existing products. “It is a complement to our ongoing programs,” Brown says.
What are the benefits of the Bank On Hattiesburg Initiative for the participating community banks?
“There are opportunities to begin and grow banking relationships with customers that you may not have considered,” Macko says. “The hope is to always develop new customers and hopefully move them through the cycle of mainstream banking that ultimately leads to help them obtain a home,” Brown adds.
For Magnolia State Bank, Rouse says, the program is simply another way to give back a little more to the communities that have helped the bank become successful. He says there was no reluctance to “join forces” with larger banks and credit unions. “We saw the need and wanted to help,” he explains. “A stronger, more educated community benefits everyone.”
Community bankers involved also see the potential for similarly collaborative financial literacy initiatives to work well elsewhere. “The size of the community does not matter,” says Rouse. “The understanding that these consumers are being taken advantage of and the determination to do something about it is what drove this initiative.”
William Atkinson is a freelance writer in Illinois.