Raising the Standard

By Evan Sparks

The Bank On movement for financial inclusion continues to accelerate. In July, the Cities for Financial Empowerment Fund—which developed the Bank On standards and which certifies deposit accounts that meet them—announced that more than 100 depository institutions now offer Bank On-certified accounts.

The number has nearly doubled since October 2020, when, at ABA’s Annual Convention, ABA President and CEO Rob Nichols encouraged all banks to offer a certified account. But while Bank On accounts are available in every state and 99 of the nation’s largest 100 metro areas, a list of 100 institutions still leaves lots of opportunity to expand Bank On participation, especially among the nation’s midsize and community banks. With that in mind, what is the certification process like for banks? And what’s motivating bank leaders to join the Bank On movement?

Expanding the imagination

For Indiana-based First Bank Richmond, a $1.2 billion community bank that was certified this year, Bank On represented an expansion of imagination.

“Serving the underbanked has always been something we’ve looked at doing and, quite frankly, we were never quite sure how we could do that,” says Robin Weinert, SVP for operations in First Bank Richmond’s retail banking division. She notes that the bank had always provided a savings account option for those who could not be cleared through ChexSystems due to negative experiences with checking accounts.

“We did have some barriers, and most of them were the mental barriers, because every single person on our team would say, ‘How can we really do this? This is going against everything a banker has ever learned if you do not pass ChexSystems!’” Weinert says. However, the unique design of Bank On accounts—notably, the option for checkless checking that provides robust digital payment capabilities while minimizing the risk of bounced checks—brought the team’s comfort level up.

“We thought that was really important for them to be able to do their banking, to learn good habits, and without those checks and overdraft they’re not going to get themselves in trouble,” says Weinert. “So, it was a safe account, but it was a very usable account.”

Sprucing up an existing product

Columbia Bank—a $16 billion bank based in Tacoma, Washington, with locations across the Pacific Northwest—had its Foundation checking product certified in 2020. The motivation to get active with Bank On and certify its Foundation account came from the bank’s partnership with community organizations that work with clients who’ve had “a little bit of a rough start,” financially speaking, says Adam Stein, CRA officer and compliance manager at the company.

“Listening to those community partners, we really started to hear that working through the Bank On movement was a great way to help understand the needs of a wider swath of clientele,” he says.

Much of those conversations came through engagement in local Bank On coalitions, says Stein. (Washington has 10 at the state and county levels, more than any other state.) “We’ve gotten so much value in engaging in those coalitions,” he explains. “You get a lot of really good information and a lot of intel at the ground level. It really ends up giving folks a chance to see all the various sides and then come up with solutions that make sense for everyone.”

At BMO Harris Bank, the $150 billion-asset, Chicago-based subsidiary of the Canadian “Big Four” institution Bank of Montreal, “we always had a Smart Money account and no-overdraft account, but when we built that product, we weren’t aware of Bank On,” says Paul Dilda, head of retail strategy products and segments at BMO Harris. “On the very specific requirements, we were close. We just had to make a few tweaks to the way we constructed the product, and as a result, we’re now very proud to be Bank On-certified, and we hope to get a lot more of those accounts out there.”

A smooth process

Once a bank has decided to move forward, the process can be quick. While First Bank Richmond initiated the process in October 2020 and was certified in July 2021, that timeline was driven by a variety of other projects the bank was undertaking with which EasyFit Checking had taken its turn. “We had a lot of support from [ABA’s] Naomi Camper early on and also [the CFE Fund’s]David Rothstein,” says Amy Larrison, VP and regional bank sales manager. “It really was a process that was user-friendly and, again, I think we just had other things also going on at the same time. It’s very doable in a short amount of time.”

In the case of a bank with an existing no-overdraft account, the process can be even faster. “Once we learned about Bank On and we understood their criteria, we were able to turn that around in a few months,” says Dilda, noting that one change BMO Harris made to its Smart Money account was to eliminate the account closing fee in alignment with the Bank On standards.

Of course, one of the key challenges with launching a new checking product—or revamping a current one—for community banks is handling the process with their core processors. While a few banks do report slowness from their cores, most say things have moved along. That’s borne out by the numbers, which have seen a dozen additional community banks get accounts certified since October 2020, when ABA announced that 20 core technology providers—including Fiserv, FIS, Jack Henry and Associates and Finastra—have committed to simplify the process for their bank clients to create and offer Bank On-certified accounts.

“That’s a pretty short conversation when it came to challenges with our core provider,” says Casey Reynders, with a smile. He’s director of product management at Columbia Bank. “We really didn’t have any. We purposely built the product around readily available parameters on our core—we utilize all the same solutions on the front end for digital banking—so there’s really no limitation there, no custom code had to be written [and]we could build it pretty quickly get it tested and out the door.”

The team at First Bank Richmond agrees. “We have a very good staff that understands the system, so when we started looking at the parameters and the exceptions area and things that we had to put into place to make this account work, it was pretty easy for us,” says Weinert. “We really did not have to reach out to our core to get the information; we pretty much knew how to get things set up so it’s actually a pretty easy process.”

“Even with legacy banking systems where these types of changes can sometimes be onerous, it wasn’t that difficult to change a few of the features that align with the requirements that Bank On gave us—that gives them the confidence to be able to promote this as a low-fee type of product for the clientele that they’re promoting it to,” adds Dilda.

Getting the word out

Overcoming internal or technological obstacles is one thing. It’s entirely another if you have a Bank On-certified account. But the people who would benefit from it most have no idea that it exists.

When I spoke with First Bank Richmond in early July, the bank had only been certified for about a week and had not yet opened an EasyFit account. Weinert says the bank plans to get the word out in its communities using social media and promoting it through community partners to “get right there toward the people who need it.”

Meanwhile, Larrison says, First Bank Richmond has trained its frontline staff to “offer our EasyFit account [by]talking about ways that people can manage their money safely and conveniently. We’ve reduced a lot of barriers with this account.”

Columbia Bank has also focused on training staff. While Bank On products are not new to the bank, “the previous product that we used in this space was only available in part of our footprint and only certain branches,” says Reynders. “It was rarely used, so bankers weren’t very familiar with it and how to speak to some of its benefits.”

Part of building the Foundation account into the Bank On-certified product it is today involved “taking the whole thing out of the shadows,” Reynders explains. “We don’t position it as just a second-chance account or just available through certain branches. It’s on the regular menu, so to speak, so it can be accessed by any banker, any client, anyone coming into any of our branches.”

At BMO Harris, Paul Dilda challenges people to consider “all kinds of customers,” not just those traditionally considered underbanked or unbanked, for Smart Money. “I think sometimes there’s an assumption around who might choose a no-overdraft account. It’s not fun paying overdraft fees. If you have challenges with overdrafting, then you know it’s wise to consider a product like Smart Money, regardless of whether you’re affluent or not, whether you feel knowledgeable about financial products or not. It’s just a good thing if you want the protection and security of no-overdraft, no-NSF in your account for a very reasonable monthly fee.”

Seeing benefits

Bank On-certified accounts are not merely an altruistic product. Banks report financial success from the offerings. According to the latest Bank On account data, released in June 2021 by the Federal Reserve Bank of St. Louis, in 2019, 85% of new accounts were opened by a customer new to the bank, with more than 1.9 million Bank On-certified accounts opened that year. Three-quarters of those customers were making debit transactions with a collective value of $15 billion. A quarter have a direct payroll deposit, and three-quarters are digitally active.

Reynders concurs. “Another big lesson learned was to not discount the benefit this product brings to the bank,” he says. “We knew it was going to benefit the client—but the fee income contribution on these accounts, the level of digital engagement of these clients is above average for us. We’ve mitigated our risk to a level with which we’re comfortable; we’ve got accounts that are profitable. At the end of the day, it’s been so mutually beneficial to offer the product in the way that we do, and we’re excited about that.”

One benefit First Bank Richmond sees is enhancing its connectivity with its commercial clients. “We like to partner with our business customers and then offer their employees checking accounts so that they can have direct deposit available to them,” says Larrison. “In the past, we’ve had to just open up a savings account for people who didn’t pass ChexSystems. Now we’re giving them a great, robust, transactional account that they can really use.”

‘Do-right culture’

“We really see it as part of our do-right culture—where when we do right by our employees and customers, we end up doing right by our communities and shareholders as well,” says Columbia Bank’s Stein. “When we’ve had the Foundation account online, we really saw that we were able to meet the needs of more clients. In one of our markets, [a client]was cashing checks at the bank in but wasn’t able to open an account with us for a good long while. When we finally brought the Foundation account online and up-to-date, we were able to open an account for her. She was crying . . . it was the chance to be part of the financial mainstream. That’s a lot of what motivates us to join this big movement.”

Garry Kleer, president and CEO of First Bank Richmond, agrees. “For a long time we’ve known that we have consumers that don’t have bank accounts in our markets—it could be for cost; it could be for convenience; there could just be a lot of reasons. So when we saw this initiative being offered, we decided to get on board so that we could offer our consumers a more safe and affordable way to handle their money.”

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About Author

Evan Sparks

Evan Sparks is editor-in-chief of the ABA Banking Journal and senior vice president for member communications at the American Bankers Association.