Community Reinvestment

How Can Banks Serve The Underserved?

The first step is to listen and learn

William Valvo

June 30, 2020

ReevX Labs Opening Photo

For banks and credit unions looking to respond to those hit hardest by the pandemic, experts offer this first step: listen and learn.

The first thing to learn is, for a variety of systemic reasons, the hardest hit are often communities of color. The pandemic has intensified the inequality between white communities and these communities of color. Half of Black and and Latinx businesses are in danger of closing due to the pandemic. Black and Latinx-owned businesses struggled disproportionately to secure PPP funding, with only 12% of businesses receiving funding compared to 38% of businesses overall. And this does not even scratch the surface of deep-rooted inequalities plaguing the path to financial health at every step of the journey.

In light of this, it may seem daunting for community banks and credit unions to chart a course of action, but the solutions, it seems, are out there waiting. Banking New England spoke to three leaders in listening to better understand – how can your bank serve the underserved?

Malia Lazu, Chief Experience and Culture Officer of Berkshire Bank

Malia Lazu’s background is a bit of an anomaly. She’s a community organizer with 20 years experience, not a veteran banker. At Boston-based Berkshire Bank, Lazu brings a new way of thinking to balance their financial expertise. The intersection of those different pools of knowledge – finance and organizing – is a sweet spot of impact-focused innovation.

Malia Lazu of Berkshire Bank
Malia Lazu

For Lazu and Berkshire Bank, collaboration starts with listening. “[Listening] is an important thing to see as an action… To all of the sudden say ‘Do!’ is like you giving me a Laker’s basketball jersey and telling me to go play with them… I would get in the way.” 

This is easier said than done. A legacy of systemic racism has taught communities of color to mistrust financial institutions, so community banks and credit unions without a strong track record are starting in the red.

You can’t fake trust. Lazu stressed the importance of first making the sincere decision to see these communities as a new market, and then taking strong steps to build authentic relationships. “You can’t expect to collaborate with a community that has so little reason to trust you without trying to build and repair the trust first … You actually have to show them you mean it,” said Lazu. 

One way Berkshire Bank is doing that is through Reevx Labs, an initiative to build community centers as an alternative to bank branches. “The whole idea of Reevx Labs is to create a space that allows us to build with the community in an authentic way.” Although Reevx Labs has limited banking functions, it’s most importantly a space where “the bank wasn’t putting themselves first.” Berkshire Bank makes that a conscious effort, preferring to lead from behind. “If you dedicate yourself to letting the community lead you, they will tell you what you need to do.” 

How banks respond to their communities may also determine their own well-being. Lazu stresses that this is a matter of survival: the modern consumer can see through inauthenticity.

“The 21st century looks like people of color; it looks like LGBT families; it looks like a lot of gig economy. It looks like people wanting to make sure their money says something about their values.” Banks do relationships better than anyone else, and they need to lean into that in a genuine, authentic way. 

“If you listen to people, if you provide good service, and you provide an authentic relationship, you’re going to do nothing but good banking,” said Lazu.

Melissa Gopnik, Senior Vice President at Commonwealth

For Melissa Gopnik of Commonwealth, listening to the underserved is an issue of translation. Boston-based Commonwealth works with financial institutions to build and scale solutions for financially vulnerable people. To accomplish that, they work to amplify their voices and translate their needs into action.

Melissa Gopnik of Commonwealth
Melissa Gopnik

Gopnik points out that there are relatively easy, known solutions some banks are still slow to adopt. Toward the end of April, in response to the pandemic, the federally regulated limit on withdrawals and transfers was removed, but as July approaches, some banks still have these restrictions in place. For the financially vulnerable, flexible access to funds can make a huge impact.

It may seem like a small step, but it goes a long way towards building trust. According to Gopnik, you won’t be in a position to listen if you aren’t trusted. “People love talking … but they have to believe the person listening to them will not judge them … And that they’ll do something; that they’ll come up with better financial products that serve their needs; that they’re genuine about it.”

You need to listen and respond meaningfully. But perhaps even more importantly, you need to make a conscious decision about who your customers are. Traditionally, banks may not have seen financially vulnerable communities of color as customers that they need. But for community banks, it could be a different story. 

Gopnik elaborates, “Know all your customers and all your potential customers and all your community members… If people in your community are Black, you should be talking to people who are Black.” Similarly, if your community has women-headed households, you should be speaking to women. Race and gender have necessarily been at the heart of Commonwealth’s  work, but the point is simple: serve your community, in all its shapes, colors, and sizes. 

It might seem challenging, but Gopnik recommends looking to similar banks making progress in the field; repurposing some of your marketing methods, like surveys, for deep listening outreach to better understand your customers as individuals; and looking at your on-hand data to discover new insights. 

Ultimately, Gopnik is hopeful about deep listening in the community and industry overall. “There is an opportunity now to talk more openly and have people listen… and there is a new opportunity for community banks to think about who their users are and who their customers should be, in a way that’s more inclusive.”

Kevin Cohee, Chairman of OneUnited Bank

Kevin Cohee is chairman, owner, and CEO of Boston-based OneUnited Bank, the country’s largest Black-owned bank. OneUnited saw a surge in deposits through Killer Mike’s #BankBlack movement, which asks Black individuals to move their money to Black-owned banks, and has been a major proponent of the trend since.

Kevin Cohee of OneUnited Bank
Kevin Cohee

The #BankBlack movement’s success was in large part thanks to its spread through digital channels and social media. Cohee and OneUnited have made a distinct effort to reach their customers digitally, for example their extensive financial literacy courses on topics like homeownership. For Cohee, the “role of a financial institution is to be a leader and help people understand.” Work on financial literacy is not new, but OneUnited is more explicit with its customers on the “why” – homeownership and real estate are addressed as a major factor in the black-white wealth gap

OneUnited’s success shows the importance of proving that you understand your community’s struggle, which requires first and foremost an empathetic ear. Perhaps more than listening, the success also raises questions about representation in banks. As major banks push to increase diversity at the top ranks, does your organization’s makeup reflect the community it serves? 

OneUnited is unapologetically Black, but throughout the conversation, Cohee stressed his identity as an American, and his pride in seeing the country rally together. “Black people have too much blood in the ground to do anything but love and participate in the enrichment of America, and to enjoy the fruits of that effort.” He continued, “This is our country. We have to all work together.” 

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