Demographics

Could getting people to save more money be as easy as changing around the office furniture? Based on Emily Garbinsky's research, the answer is yes.

It's easy for banks to spin their wheels on local reinvestment, financial education and other efforts to help underserved communities. To make outreach programs successful, bank executives need to carefully vet nonprofit and other partners, listen to their employees on the front lines and reflect on their own reasons for getting into banking.

Daunted by the challenge of how your bank can help underserved members of the community? Here are some simple tips and bits of wisdom from bankers, nonprofit leaders and local government officials.

One way to help the global economy prosper is to think of the poor and the middle class as untapped assets for entrepreneurship and job creation. That was the premise underlying a panel discussion at a recent conference on financial inclusion.The panel included, from left, Clare Woodcraft-Scott, the chief executive of the Emirates Foundation; Monica Mehta, managing principal of Seventh Capital in Houston, a family office that invests in lower-market consumer businesses, and author of "The Entrepreneurial Instinct: How Everyone Has the Innate Ability to Start a Successful Small Business," and Aja Brown, the mayor of Compton, Calif. Their discussion took place in Atlanta at the 2015 Hope Global Forum, presented by Operation Hope.

Aja Brown, the mayor of Compton, Calif., says introducing young people to what's possible, so that they don't feel limited by their current circumstances, is a way of continuing the mission that Martin Luther King Jr. started. Brown was a featured speaker at the recent Hope Global Forum, which focused on the theme of financial inclusion. She was there to discuss several initiatives underway in Compton, including one with the University of Southern California to offer industry-specific employment training.

Banks need outside help to deliver credit to the underserved, says Tim Wennes, the West Coast president of MUFG Union Bank, who shares advice on what kind of partners to seek and how to vet them.

Rallying bank employees to participate in outreach projects takes hard work in the beginning, but their involvement is essential to building a rapport with the community, OneWest Bank CEO Joseph Otting says.

There are some fairly basic, decisive steps banks could take to educate people outside the financial mainstream, and it would make banking more profitable, says John Bryant, the chairman and CEO of the nonprofit Operation Hope.

Racial disparity in small-business loans remains glaring, despite some improvement. Lenders' unfamiliarity with African-American communities is part of the problem, but so is the need for financial education among prospective borrowers.

Elected officials in Santa Fe and Seattle are considering plans to form municipal banks to promote affordable housing and reach out to the underbanked. Bankers are wary since such institutions could present competition.

Affordable pre-paid cards and checking accounts targeted at low-income customers are among the positive trends likely to gain steam in the months ahead.

Opus Bank in Irvine, Calif., has received regulatory approval to form a broker-dealer subsidiary that will expand its merchant banking capabilities.

By linking mobile payments with money transfers, Western Union created a new use for Apple's mobile wallet. But it must still rigidly conform to the basic requirements of an Apple Pay transaction — without a bank account, there is no payment.

Banks partnering with prepaid card providers face the potential of higher deposit insurance fees and other ramifications from the Federal Deposit Insurance Corp. classifying accounts as "brokered."

Citigroup has agreed to change its policies that prevented low-income consumers from opening checking and savings accounts.

Ten financial institutions, including four banks, will accept the new IDNYC card as a primary form of identification for new accounts. Community advocates hope the move will help more immigrants and unbanked individuals use banking products.

FS Card announced Thursday that Republic Bank & Trust in Louisville, Ky., will issue its new subprime credit card, which is scheduled to be launched this spring.

The market for the serving underbanked customers expanded last year, mostly due to a rising demand for subprime auto loans, the Center for Financial Services Innovation said Thursday.

Banco del Pacifico has announced plans to deploy two types of automated teller machines to help serve the underbanked in Ecuador.

The CFPB's proposed requirements threaten to trap next-generation digital wallets and cryptocurrency innovations in a consumer protection regime narrowly tailored to the unique characteristics of reloadable prepaid cards.