By Carol Gilhawley
Now that school is back in full swing, students must get back to work too. In a positive and profitable undertaking, a few banks have opened branches in high schools—manned and run by the students themselves.
The FDIC’s Youth Banking Network membership consists of 47 banks and of those, the following seven banks have opened school-based branches:
- Bank of New Hampshire
- Clinton Savings Bank
- First Bank of Highland Park
- First County Bank
- First Metro Bank
- Reading Cooperative Bank
- Treynor State Bank
Generally, these branches are only open to students, faculty and staff. They rarely have an ATM on-site, so customers must physically come into the branch to do transactions. This means student tellers learn how to handle customers as well as cash!
Training more than tellers in Reading.
Reading Cooperative Bank (RCB) in Reading, Mass., operates two high school branches: one at Reading Memorial High School and the other at Northeast Metropolitan Regional Vocational in Wakefield. Between them, the two school branches have over 300 customers.
The two branches operate a little differently. The one in Reading’s school has been around for ten years, and its introduction was spearheaded by the Superintendent of Schools. The branch, complete with teller windows, was built into the school when it went through a major renovation.
“The retail bank course is an elective where students train to be tellers—and they deal with deposits, withdrawals, debit cards and sometimes loans,” said Mike Foley, branch manager of both high schools. Up to 20 students during five different school periods work in the bank at Reading Memorial each semester.
Since Northeast Metro in Wakefield is a technical school, building a bank branch there last September was a school-wide initiative. The drafting department designed the branch, the carpentry team built it, and the electrical school wired it. The Business Technology department now staffs it—and students work there to get course credits.
“I only have two students working in the branch at any time and I have eight students per quarter,” said Amy Van Magness, H.S. branch supervisor at Wakefield. “We use an open concept design.”
Both branches are full service offices of RCB and so offer products from checking and savings accounts to business accounts and loan products. They follow the school calendar and are open during school hours.
The venture has turned out to be a win for RCB, in terms of both community outreach and profitability. “The purpose is to teach kids financial literacy and give them job training skills,” said Foley. “We have found kids take ownership of their accounts and both schools have low close-out rates. They tend to keep their accounts for the long haul—even when they go off to college.”
Transactions are paper-based and money is held in a secure safe within the bank, with an alarm and cameras.
The initiative “helps us build relationships in the community,” added Van Magness. “The school administration is active and supportive. It’s a model we really like. We’re arming kids with financial information at an early age and that certainly matches what our bank is all about.”
Building a national model in Alabama.
In Alabama, First Metro Bank has two branches within Muscle Shoals and Florence High Schools. Both branches are named after each school’s mascot, Trojan Branch (Muscle Shoals) and Falcon Branch (Florence).
“Our model has worked out so well that the FDIC has picked it up to use it as a national model,” said Alana Parker, Education and Training director at First Metro Bank. “Students don’t access our internal bank systems. Everything they do is on paper—such as currency exchanges, deposits, and withdrawals. Each student teller has a cash drawer they’re responsible for.”
First Metro started its financial literacy program in 2008 and opened both school branches on the same day, August 19, 2013.
The same construction group that was building a new bank branch also built the branches within the schools, so all three projects were running simultaneously. The bank covered the cost of renovation, complete with security system.
Since the in-school branches began, Jerra Burden, CFMP and marketing director at First Metro Bank in Florence, said a substantial number of accounts have been opened for both teachers and students but she could not disclose how many.
The Muscle Shoals branch has two teller windows that are open all the time—even during lunch—and four students who work as tellers. Florence has three teller windows and one head teller—and uses eight students in total. “There’s no ATM so student tellers have the opportunity to handle every potential transaction,” said Burden. Teachers are responsible for oversight of the students.
In the past four years, over 40 students have served as tellers.
“We haven’t had any hurdles at all,” Parker explained. “Implementation took time and planning. We made some adjustments that first year, but since then it’s been running smoothly.”
Through training, student tellers have been taught how to open checking and savings accounts for both students and teachers. When the school branch program launched in 2013, bank executives discovered the need for students, who were under the age of majority in Alabama (19 years old) and who held part-time jobs, to manage and access their funds as the sole owner of their accounts.
In partnership with the FDIC, the bank created a Metro Junior Savers account where students aged 15 or older can open a savings account and act as the sole primary owner.
“We’ve loved being a part of this program and we run into our students wherever we go,” said Parker. “It also makes students more employable when they graduate high school.”
It has also turned out to be a great feeder system for First Metro Bank, which has hired five part-time tellers from the high schools who work there as they complete their college courses.
Interested in implementing an in-school branch?
Step one is to contact your regulatory agency. The state of Massachusetts, for example, requires notification from banks of the establishment of a branch, school branch, or school program, through the Office of Consumer Affairs and Business Regulation, according to Regulatory Bulletin 2.3-104.
The FDIC must also be notified.
Once a bank receives approval from its regulatory agency, the bank executive in charge needs to work with the internal compliance, operations, marketing, and training departments to create a plan. When that plan is in place, then it’s time to approach the local school system’s superintendent.
Carol Gilhawley is a business and financial industry journalist based in the Greater New York City area.