You scratch my back, I'll scratch yours.
That's the philosophy behind an unusual partnership between United Bankshares Inc. in Charleston, W.Va., which wants to add deposits in Washington, and some local organizations, whose effort to relieve crowded streets and subways encountered a financial stumbling block.
With limited funds to expand its Metro rail system, Washington is pushing bicycles as a way to extend public transportation. Capital Bikeshare, launched in September 2010, is one of the nation's biggest bike-sharing networks, where commuters use bicycles to replace cars, or to supplement subway lines and bus routes.
One major problem for some potential users is that Capital Bikeshare's automated stations do not accept cash. To check out a bike from one of Capital Bikeshare's 110 solar-powered stations, users must first swipe a debit card or credit card.
Such a system locks out plenty of low-income commuters who use Washington's Metro trains and buses but lack a checking account or a credit card. Many Capital Bikeshare bike-stations are located next to Metro rail stations and bus stops.
"The system does rely on credit cards and debit cards," says Chris Eatough of BikeArlington, an Arlington County, Va., agency that helps administer Capital Bikeshare. "It's the only way we can do it."
Capital Bikeshare's advocates and Bank on DC, a public-private partnership that helps unbanked consumers open checking accounts, discovered a way around the problem. Bank on DC is offering a $25 discount on yearly Capital Bikeshare memberships to those who open an account at either United Bank, a unit of United Bankshares, or District Government Employees Federal Credit Union. A Capital Bikeshare annual membership normally runs $75.
"These are not necessarily high-balance accounts, but a lot of the customers are using their accounts very prudently," says Craige L. Smith, the chief operating officer of United Bank's Virginia division. "We think there is real value in establishing those relationships."
United Bankshares joins other banking companies that have realized the value of the unbanked consumer. Conventional wisdom has held that unbanked customers have little money, and are thus less likely to be profitable customers.
Wal-Mart Stores Inc. proved that line of thinking to be misguided. Former Wal-Mart executive Jane Thompson, whom American Banker named its Innovator of the Year for 2011, said the retailer's financial-services unit, which targeted low-income consumers, brought in "many hundreds of millions of dollars" in profit annually.
Others followed, from credit-card purveyors American Express Co. and Visa Inc., to big banks like Bank of America Corp. and Capital One Financial Corp. B of A and Capital One are part of the Bank on DC partnership.
The $25 Capital Bikeshare discount program only applies to unbanked consumers who open accounts at United Bank or District Government Employees Federal Credit Union.
"I don't know that it's a big profitable endeavor for us, but there isn't a lot of cost associated with it," Smith says of United Bank's participation in the Capital Bikeshare promotion.
"If [the new customers] use the account and start taking advantage of it, then we feel like it will be profitable for us as we look to the future."
Though far from the biggest bank in the Washington area, the $8.6 billion-asset United Bankshares still has a sizable presence. It had 10 branches and roughly 1.3% of the deposits in the Washington metro market at June 30, ranking it No. 11, according to the Federal Deposit Insurance Corp.
As for bicycles, the jury is still out on whether pedal-power can be a legitimate solution to big cities' transportation problems. Early signs from Capital Bikeshare suggest bikes have a lot of potential for commuters.
Since launching in September 2010, Capital Bikeshare has grown to more than 110 stations and 1,200 bikes, located throughout the District and across the Potomac River in Arlington, Va.
Other jurisdictions in the Washington area have applied for funding to add their own Capital Bikeshare stations, including Alexandria, Va., and Montgomery County, Md.