BusinessTN

In a Wall Street Journal opinion piece published in January, former President Bill Clinton and California Gov. Arnold Schwarzenegger urged financial institutions and community groups to work together to help the millions of Americans who spend an estimated $8 billion each year at check-cashing outlets, payday lenders and pawnshops for basic financial services that most receive free at local banks or credit unions.

They write: "Here is one initiative that can unite progressives and conservatives as well as business leaders and community activists: helping the unbanked enter the financial mainstream by opening checking and savings accounts and working collaboratively with financial institutions and community groups to develop and market products that work for this untapped market. This will put money in the pockets of individuals and grow the economy. And it won't cost taxpayers a dime."

BusinessTN asked representatives from banking institutions across the state to weigh in on the subject by responding to the following questions:
What is your reaction to this? How do you see the role of banks in bridging the economic gap between unbanked low- to moderate-income individuals and those higher-income individuals who typically bank at your institution? Without providing too much detail about specific product offerings, what is your institution doing to cater to this untapped market?

Mike Edwards
President
Tennessee Banking Group
First Tennessee Bank
Increasing financial literacy and enhancing access to financial institutions are among the steps banks can take to help marginal income and low-income individuals with limited banking opportunities. First Tennessee has increased its contributions to and volunteers for a variety of programs that promote financial literacy.
For example, the bank's consumer lending group has worked with a nonprofit program that helps homeless families get back on their feet by teaching them a variety of skills, including better handling their finances. Helping people understand how personal finance works is a key to serving the underbanked, who often have little experience with establishing savings and checking accounts, balancing checkbooks and other personal finance basics.
The First Tennessee Community Reinvestment Act department, along with Federal Reserve banks around the country, sponsors Money Smart, an FDIC program that targets low- to moderate-income individuals with a one-hour class on budget and credit management. The Money Smart curriculum is delivered through First Tennessee's workplace banking program initiative to employers in markets across the state.
In addition to incentives like free checking, the bank also offers a Payroll Card. It's a checkless bank account employers can offer their employees. This free service can be a good introduction to banking for people without checking accounts. It can also eliminate check cashing fees and trips to the bank because it acts as a debit or ATM card. The bank's fraud detection service is another advantage that would be of particular value to individuals who do not bank regularly.
First Tennessee also recognizes the importance of teaching personal finance management early through its annual support of the American Banker's Association Teach Children to Save Day and the bank's own Financial Literacy Essay Contest for middle and high school students.