By Deb Stewart
Does your bank have National Teach Children to Save Day on its programming calendar? If so, you’re part of an increasing number of financial services firms that are recognizing the critical role they play in growing a better, stronger customer base for the long term.
As Dan Schulman, president and CEO of Paypal, once said: “Economic and financial literacy is a foundational element to achieving financial health and needs to be included in early education programs. We have seen firsthand that improving the financial health of individuals has a powerful ripple effect across families, communities, companies, and economies. And that process starts in the classroom.”
But if you haven’t yet dipped your toes into financial literacy education for young people, check out some of the ways other banks are doing it.
Elementary School – What is the difference between a “want” and a “need”?
How early is too early to start talking about money?
“It’s easy to say let’s wait,” said Ray Martinez, co-founder and president of financial education at EVERFI. An education technology firm, EVERFI works with numerous banks to provide meaningful, age-appropriate financial education coursework to their communities. He added, “But the sooner we present students with real world scenarios and allow them to make financial decisions in a low risk environment, the sooner they can apply that knowledge in the real world. And maybe even share those new skills with their families.”
Martinez has some advice on what works best. “To engage kids you have to make it fun. In the best programs, digital aspects blend education and technology really well. Our goal is to create engaging, immersive learning experiences based on strong pedagogy—creating avatars and personalized assessments and pathways, while helping students learn in fail-safe financial environments.”
But the program goes well beyond digital. More than 750 financial institutions are partnering with EVERFI to bring these programs to elementary students and older.
Banks “sponsor” as many schools as they choose, providing the schools access to EVERFI content. Bankers also go into these schools to provide a truly blended learning experience. Most bank sponsors range in asset size from 100 million up to 100 billion plus. Bankers are provided with companion activities that reinforce the students’ current interactive content. Partnering technology with live presentation and interaction results in higher student engagement and better questions from students.
“We have seen a compounding effect in communities with multiple touchpoints around financial literacy—elementary school, middle school, high school, and even family and consumer programs,” Martinez observed. “Multiple experiences will better ensure good saving and budgeting habits for both kids and families.”
(The ABA Foundation also offers a wide range of financial education programs that banks can offer to students ranging from elementary school through the late teens.)
High School – Loans for when you forget your lunch money (and other things).
For the past 23 years United Bank (formerly First Citizens Bank) of Kentucky has partnered with Elizabethtown High School to run the First Panther Bank. “This program has run for all these years because of the impact we’ve seen on students in the program, the goodwill of parents and school staff,” said Kimberly Douglas, vice president of community relations.
As part of a business class offered to high school students, the bank offers lunch loans ($2-5), formal loans ($10-100 with parent approval) and savings accounts. The approach to the class reflects the real world, with an objective of making a profit over the course of the school year. While the United Bank staff is there to provide support and resources, the students actually run the bank.
At the beginning of the school year, students meet with the United Bank HR representative to determine the position that best fits their skills and goals. This could be working in marketing, lending, customer service, accounting, serving as a teller, or even acting as secretary to the board.
Students shadow United Bank staff members who hold their positions at the bank and meet with them for coaching. Training in customer service and professionalism is key. And bank training continues throughout the year, with topics like fraud detection and risk management.
To prepare for the bank opening, students develop a fee schedule. They sell ads to local businesses, which provides a source of income, and they also sell bank “stock” prior to opening as another income source.
When they’re ready to open the bank, students stage a grand opening and offer a promotional item. Ongoing sale of promotional items provides additional income.
The school makes loans with documented repayment terms, including interest and late fees. Savings accounts are paid simple interest. All account tracking and accounting are done at the school. There is no integration with United Bank’s systems.
Every month, students meet with representatives from the bank for board meetings. There they discuss issues like current financials, any loan delinquencies, and promotional plans.
At the end of the school year, dividends are paid to “shareholders,” and remaining profits are rolled over to the next class.
“There have been so many benefits to the community from this program—and an added bonus for the bank has been that several of those students have come to work for us after participating,” said Melissa Lamont, vice president of the Heartland region.
College students – Understanding the costs of college and having a plan to pay encourages more students to graduate.
MidFirst Bank and the University of Oklahoma (OU) launched the OU MoneyCoach program last May. The program places nine MoneyCoaches on the OU campus with the objective of meeting with all incoming freshmen and their parents during enrollment. This provides the opportunity to discuss college costs and develop a successful financial plan. OU’s objective is to improve retention and graduation by ensuring that students have a plan in place to pay for their college experience. Financial reasons are often a major roadblock to completing a degree.
Here’s how the program works:
- MoneyCoaches are not typical bankers. Generally coming from backgrounds in teaching or counseling, they are selected based on their ability to establish relationships with college students. Training focuses on developing a deep understanding of all of the costs and fees for an OU education and all of the financial options available to meet those obligations—including scholarships, financial aid, grants, loans, and on-campus jobs.
- Students are introduced to the program shortly after being accepted at OU. They are encouraged to complete a Financial Success Plan prior to their meeting with a MoneyCoach during enrollment. The app allows them to calculate total costs and funding options.
- Some students will meet with their MoneyCoach several times during their freshman year and beyond. Students may seek the guidance of a MoneyCoach on any financial topic including budgeting, completing financial aid forms, and even balancing their checking accounts. Coaches normally start these meetings by building rapport with conversation on classes, homesickness, or the student’s hometown or major.
- Coaches are conveniently housed in a residence hall where they also host workshops during the school year.
“Navigating through financial processes and procedures is a challenge for students and their families,” said Leigh Singleton, FVP and director of financial education at MidFirst. “The MoneyCoaches have been able to alleviate the stress and anxiety involved in this process, allowing students to focus on achieving academic success.”
The first students going through this program will soon be sophomores. What’s next for the program?
MidFirst is open to partnering with other universities. In addition, the bank is already making plans to add content on paying for college to the high school financial workshops it offers through its MoneyMoments financial education program.
The MoneyCoach program has made a real difference to students, parents, the university and MidFirst.
Deb Stewart is a contributing editor to ABA Bank Marketing.com. Located in Charlotte, N.C., she is an independent consultant working for the financial services industry. Email: [email protected].