Can Community Partnerships and Programs Benefit both the Bank and the Community?

July 21, 2011 at 12:42 PM
Over the past decade, consumers have grown more and more concerned with directing their consumption so that it delivers some benefit to society (even if the relative impact is quite small). Many people, especially among Gen Y, want to spend money and/or time on things that are “green” (sustainable and/or energy efficient), charitable, and – perhaps most importantly – local.
 
A 2010 study by Young & Rubicam found that 64.7% of the population is willing to pay a premium for products/services from companies that contribute to the local community. Restaurants have been the most visible responders to this shift, often touting their “locavore” credentials and prominently displaying listings of the local farms and businesses of which they are patrons – for example, one lunch place close to CPG’s offices displays a list every local farm from which it gets the ingredients for its salads next to the menu.
 
One could argue that community banks are the original “locavores” – taking local deposits and investing them back into the local businesses to which the bank lends. In the current earnings environment, it may behoove many institutions to take another look at ways in which they can leverage activities or partnerships that are already in place within the community to generate new revenues for the bank.
 
Umpqua Bank is one institution that has begun to do this through two lending programs. The MainStreet Lendingprogram uses designated funds to provide loans of $10,000 to $100,000 to small businesses within Umpqua’s footprint. Businesses who apply under this program have the option of a second review in the event that the application does not qualify through the standard loan process. The GreenStreet Lending program allows individuals to apply for loans to make energy-efficient improvements to their home or business. The bank partners with local contractors who work with the prospective customer to determine what improvements need to be made. Certain fees are waived for these loans and the terms are structured to take into account the timing of the receipt of government credits and tax incentives. Both of these programs are aimed at supporting local businesses and the local community and both have brought the bank positive publicity and, more importantly, new loan business.
 
Your bank may not need to create a new lending program – the answer may be as simple as finding ways to inform the community about what you are engaged in and what benefits you deliver to markets in your footprint. 
 
How else can retail bankers take advantage of these and other consumer trends? We will be discussing strategies to address this question – along with many other possible tactics for generating revenue in today’s retail banking environment – at our inaugural Retail Banking Colloquium this week in Washington, DC. Check back next week for more on what issues were discussed and what solutions presented themselves at this event. If you would be interested in attending a future Retail Banking Colloquium, please contact us.
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