CDAC Spotlight: Finding Ways to Help Individuals Achieve Financial Well-Being

October 01, 2013
By  Keith Turbett

Throughout the past century of SunTrust’s operations, the U.S. economy has been through ups and downs, communities have grown and adapted to changing times, and the financial needs of individuals and businesses—along with the banking services to meet those needs—have evolved. As a response, banks—including SunTrust—are finding new ways of putting clients first and helping them achieve financial well-being.

One way to further achieve broader prosperity is to help individuals without a banking relationship move from high-cost financial relationships to more traditional financial products. Bank On Memphis is a good example of this type of assistance. In partnership with the city of Memphis and Shelby County, SunTrust and other financial services institutions will introduce an estimated 96,000 households—who currently only use high-cost financial services or do not have banking relationships at all—to lower-cost financial services. In a city with high poverty and bankruptcy rates, this means more money for low- and moderate-income individuals and families to use on household expenses, education, health care or other necessities.

A C Wharton, Jr., the mayor of Memphis, summed it up well when he said, “Those who have the least pay the most for financial services. We’re not really poor in Memphis; we just spend poorly.”

Banks can be part of the solution, but must not be naive to the challenges ahead. Many people are comfortable transacting financial business in a certain way—even if they might benefit from lower costs or a broader range of services. Changing habits can be difficult—even if it saves money. That is why SunTrust is partnering with community organizations to increase awareness of financial solutions that can help improve lives.

SunTrust’s work with Porter-Leath, a large family and children’s services organization, is an example of a community partnership that has yielded tremendous results. Through the Family Rewards program, financial incentives are earned for efforts in three main areas: education, health and work. This conditional cash transfer program is designed to help low-income families reach their full potential and break the cycle of intergenerational poverty. Through this program, SunTrust opened accounts for 600 households who were previously without a banking relationship.

The bank is also bringing financial education resources into its branches. Operation HOPE is a global nonprofit leader for financial dignity focused on providing financial education resources to the underserved, which has proven to be effective in advancing financial literacy. SunTrust introduced Operation HOPE counselors to a branch in Memphis as part of the HOPE Inside pilot program. The counselors offer services tailored to the specific needs of an individual or business owner, including credit repair counseling, business entrepreneurship training, earned income tax credit eligibility and financial literacy education. These services are free and available to anyone in the community.

In an effort to be responsive to the needs of specific neighborhoods, SunTrust realizes that it takes more than tellers, branch managers and other teammates to provide the in-depth financial counseling to help individuals make more informed financial decisions. The bank’s partnerships with many agencies—such as United Housing, Memphis Housing Resource Center, RISE and other organizations across our footprint—aim to provide one-on-one financial counseling covering homeownership, credit counseling, budgeting and other topics.

These initiatives are not limited to individuals. The bank’s business clients are taking advantage of a program called SunTrust at Work. Employees of these clients benefit from classes taught by SunTrust bankers on a variety of financial subjects, such as “Five Steps of Debt-Free Living,” which covers topics including setting a budget, talking with lenders, evaluating spending, and saving and prioritizing debt payments.

The benefits of these partnerships have a ripple effect through communities. An informed homebuyer who has participated in financial counseling is a better prepared homeowner, which decreases the likelihood of default.

It’s important for banks to know that financial pressures affect a person’s overall well-being, including health, family relationships and even the quality of sleep. By finding ways to help individuals achieve financial well-being, banks can bolster the overall strength and resolve of their communities for years to come.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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