John Hope Bryant is proving that you don't need code or an app to innovate in banking.
After more than two decades bringing underbanked consumers into the mainstream, Bryant has found a way to combat financial illiteracy that also addresses two critical business problems facing banks today: keeping branches relevant and finding new customers.
Bryant founded Operation Hope in the wake of the 1992 Los Angeles riots, seeking to reverse the vicious cycle of poverty in communities around the country. For most of its history, the nonprofit operated out of its own brick-and-mortar field offices, helping individuals avoid foreclosure, build credit and start their own small businesses.
Operation Hope relied on grants and donations to advance its mission. But in 2013, a lucrative partnership with E-Trade ended, and that compelled Bryant to rethink the whole enterprise.
"In some ways we were fired from our own business plan and we had to reimagine it," he said. "I'm not sure if E-Trade hadn't done that, if we would have ever found the new model."
Operation Hope had a co-location arrangement with Bank of the West in one of its Oakland branches, and it was notably self-sufficient. By putting counselors in existing bank branches, Bryant thought, the organization could focus on its core strengths and rapidly expand its outreach.
That idea grew into Hope Inside: a direct partnership with banks to install Operation Hope-trained financial counselors inside bank branches, paid for by the banks themselves at a cost of roughly $75,000 a year per site.
The counselors can offer free, unbiased financial advice to bank clients and prospective clients — including those with credit or debt problems that might preclude the banks from approving them for loans or other services. Clients can get guidance on how to build their credit, start a business, prepare to buy a home or avoid foreclosure.
The relationship is mutually beneficial. Operation Hope can widen its reach far beyond what it was able to achieve with its own locations, and the banks are able to cultivate new customers and earn Community Reinvestment Act credit.
Hope Inside answers a wide range of challenges facing banks — whose public image never fully recovered from the financial crisis — with a single solution.
"I think this is the first time that many of these CEOs saw community affairs, public affairs, community reinvestment, community engagement, trust — the business [banks are] in — relationship-building, race relations, economic prosperity, job creation, and even business development all line up," Bryant said. "And it's moral, which means that they can feel good about it, brag about it ... and they can rationalize it to their bean counters and to their boards of directors -at scale."
For developing a model that promotes financial inclusion, generates business for banks and gives branches a new purpose at a time of declining foot traffic, American Banker is honoring Bryant as the 2016 Innovator of the Year.
Since its inception 18 months ago, Hope Inside has grown from a pilot program of six branches to more than 40 today. And the number is rising rapidly — SunTrust, one of the program's first bank partners, recently announced that it is expanding its partnership to 200 branches by 2020.
First Tennessee Bank also has expanded its partnership, with a $1 million contribution to Operation Hope and plans for a total of 15 locations, triple the number it has now. (Counseling offices also are open in partnership with nonbanks, including the Atlanta Police Department, churches and even Whole Foods.)
Bryant said he is aiming for 1,000 Hope Inside branches to be open by 2020. The metrics indicate that the program helps banks as well as customers: SunTrust's internal evaluation showed that its seven locations serve roughly 6,000 clients annually, with a corresponding 464% increase in bank referrals year over year in branches with a Hope Inside counselor.
One thing that sets Hope Inside apart from other financial literacy programs is that it is using banks' profit motive to drive participation, rather than tugging on their heartstrings. Bryant said that is the crux of his vision — to appeal to banks' bottom line. "I want the person who eats nails for lunch to respect what I'm saying — it's just a different way of looking at business development," Bryant said. "When you have a bank showing a 500% increase in bank referrals year over year, that sells itself."
D. Bryan Jordan, president and CEO of First Horizon — parent company of First Tennessee Bank — said since first trying the concept in a few branches, the bank has counseled several thousand people, providing valuable services that might otherwise not be available. In the initial nine to 12 months, "we helped counsel 2,400, almost 2,500 people," Jordan said. "It's remarkable the folks that would show up for financial counseling. It's remarkable the progress that can be made. It's a real easy mission to connect with."