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From account origination to economic opportunity

Technology
How technology fosters financial access, literacy, and independence in underserved communities
woman holding phone smiling looking down

Key points:

  • Promoting financial inclusion for historically underserved populations may be the key to long-term resilience for individuals, institutions, and communities alike. 
  • By improving deposit economics, technology can make it feasible for community institutions to bank a wider range of people.
  • But access alone isn’t enough. Institutions like Midwest BankCentre are actively creating tools and programs to turn access into opportunity.

Is your financial institution (FI) promoting financial literacy and wellness within the communities you serve? 

The answer to that question may be the key to your FI’s future. For many community banks and credit unions, promoting financial wellness among historically underserved populations is directly linked to fostering resilience for individuals, institutions, and communities alike. 

Consider this: 7 million households in the United States don’t have a bank account, and up to 20 million others are underserved by the current financial system. Inequities persist along racial, geographical, and urban lines, indicating an opportunity for local institutions to make an impact. 

Many have already stepped up. According to the Banking Impact Report (conducted by Wakefield Research and commissioned by MANTL), the majority of consumers (55%) said that community FIs are more adept at providing access to underrepresented communities than neobanks, regional banks, or megabanks. In the same study, nearly all (95%) executives at community FIs reported providing a loan to a small business owner (SBO) who had been denied by a larger bank. And almost the same number (90%) said that they either implemented or planned to implement a formal program for financial inclusion of underserved groups. 

Technology like online account origination can play a critical role in bringing these initiatives to life. By improving deposit economics, digital tools can make it feasible for community institutions to bank a wider range of people. Technology also enables unbanked individuals to easily gain access to the financial system, as inconvenient branch locations and hours are commonly cited reasons for not having a bank account. 

But access alone isn’t enough. Many forward-thinking institutions are actively creating tools and programs to turn access into opportunity — helping even their most vulnerable customers participate more meaningfully in the local economy.

How Midwest BankCentre invests in access, inclusion, and the local economy

Midwest BankCentre, a 115-year-old community bank based in Missouri, is all-in when it comes to inclusion.

In 2021, the bank partnered with MANTL to launch online deposit origination, providing customers with convenient access to market-leading financial products at competitive rates. 

Along with investing in digital access for a broader range of customers, the bank has also committed $200 million to fostering community and economic development through the year 2025, with a focus on nonprofits, faith-based institutions, community development projects, and small businesses to benefit historically disinvested communities. The bank offers free online financial education that helps people learn more about money basics, loans and payments, buying a home, paying for college, and much more. In addition, Midwest BankCentre conducts in-person financial education with key partners throughout communities in Missouri, helping thousands of people learn more about participating in the economy and gaining financial independence. 

That doesn’t just benefit the individuals who participate in the classes. It benefits the community as a whole. Midwest BankCentre estimates that $95 out of every $100 deposited locally stays in the St. Louis region to build local businesses and families, with every dollar circulating six times throughout the regional economy. 

In a study conducted in partnership with Washington University in St. Louis, researchers found that Midwest Bank Centre’s financial education classes created an additional $7.1 million in accumulated wealth in local communities while providing critical knowledge for household financial stability. That activity supports local people and businesses, who then support other local employers. Businesses create jobs and generate tax revenues, which in turn support local schools and public services. Midwest BankCentre completes the cycle by issuing credit and making loans to people and businesses, keeping funds within the St. Louis community. 

“When you work with a community banker, you are working with a neighbor, friend, or the person sitting next to you at your place of worship,” says Danielle Bateman Girondo, Executive Vice President of Marketing at Midwest BankCentre. “We know the community and are invested in its success. That’s a powerful partnership. Our customers often become our friends, and there’s a genuine sense of trust and mutual respect. Put simply, it’s difficult to have that type of relationship, flexibility, or vested interest at a big national bank.” 

Working with small business owners to achieve shared success

According to the U.S. Bureau of Labor Statistics, roughly 20% of small businesses fail within their first year. Approximately 33% fail within two years. By year 10, 66.3% have failed. 

What if FIs could help more first-time entrepreneurs succeed? FIs would benefit (with more deposits and more loans). Communities would flourish (with more dollars circulating in the local economy). And individuals would prosper (with more paths to economic independence). It’s clearly a win-win-win situation. 

For Midwest BankCentre, one part of the solution was to launch a Small Business Academy in March 2021, which provides practical education to help small businesses access capital to grow and scale. 

The program was initially launched with 19 SBOs participating in the bank’s partnership with Ameren Corporation (the region’s energy utility), with a particular focus on the utility’s diverse suppliers. And 14 small business owners and influencers participated in the bank’s partnership with the Hispanic Chamber of Commerce of Metro St. Louis. Midwest BankCentre is committed to helping SBOs learn how to “think like a banker” to gain easier access to capital, helping them understand their financial statements and the key ratios that are important to access credit.  

Efforts like these might explain why, according to the Banking Impact Report, 69% of Hispanic SBOs and 77% of non-white SBOs believe it’s important that their bank supports underserved communities. Accordingly, non-white SBOs are significantly more likely to open a new account at a community bank or credit union (70%, compared to 47% of white SBOs). 

This translates into a clear differentiator — and a competitive advantage in a crowded marketplace. “Consumers and businesses are becoming increasingly aware of socially responsible banking practices,” says Nathaniel Harley, CEO and Co-Founder of MANTL. “They’re making their banking choices based on the institution’s impact on their community and society at large.” 

Turning access into opportunity

For today’s community FIs, economic empowerment isn’t a zero-sum game. It’s a force multiplier. And with the right strategies in place, it can be a winning proposition for everyone within your institution’s sphere of influence. 

Just ask Girondo. “We believe access to capital is a right we all deserve,” she says. “That’s why we forge unique partnerships with public, private, and nonprofit groups to give the most people the best shot at winning access. Our partnerships have brought banking facilities and mainstream services to unbanked and underbanked communities while also accelerating community revitalization.”

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