![Rethinking the Role of Banks](https://fresnoalliance.com/wp-content/uploads/2021/06/IMG_2260-620x413.jpg)
By Michael D. Evans
Beneficial State Bank is a different kind of bank. Community-oriented rather than profit-centered, the bank is committed to providing banking solutions specifically for those persons who have not been well served, or completely ignored, by the traditional banking system.
āWe are using our depositorsā funds and our equity capital to fund a lending practice that produces a new economy thatās fully inclusive, racial and gender just, and environmentally restorative,ā says Kat Taylor, co-CEO and co-founder of Beneficial State Bank. āOne hundred percent of the economic rights are held by a nonprofit. We donāt serve a single shareholder. We donāt maximize profit.ā
Indeed, the bankās profits are reinvested in the low-income communities served by the bank and the environment that sustains us all. āWe are a social enterprise pursuing our triple bottom line: social justice, environmental well-being and financial sustainability,ā states Taylor.
Taylorco-founded Beneficial State Bank, which is a Community Development Financial Institution (CDFI), to bring beneficial banking to low-income communities in an economically and environmentally sustainable manner. Taylor is also a founding director of TomKat Ranch Educational Foundation (TKREF), which advocates for a sustainable food system through ranching, training, tours, research, and school food and garden programs. The āTomā in TKREF is Tom Steyer, Taylorās climate/energy activist husband.
āOur magic tool as a business is as a force for change,ā says Taylor. āWe do best when weāre pursuing a business channel to power change. And weāre about power change, no doubt about that.ā
Taylor believes that business should be held to a high standard because āeconomic and societal outcomes are driven more by business than anything else. And government and philanthropy arenāt going to clean up after bad business. We need to be mindful of when businesses are doing bad things to us, and how we tell them āNo, weāre not going to take that.āā
Currently, the primary focus of Beneficial Stateās Fresno branch is auto lending. Auto loans ātend to be one of the first touch points of a person with a bank if theyāre seeking financing,ā notes Taylor. ā70% of our clients prefer to only speak Spanish. A lot of them make their own payments in cash, and we find that they donāt have enough of a banking relationship of any sort.ā
Taylor refers to Beneficial State as a āhigh road auto lender.ā Much like the pay day lending industry, auto lending is rife with practices that cause consumers more harm than good. āThere are a lot of shenanigans in auto lending,ā says Taylor. āFinancing a car that has 50 months life left over 90 months, which means you have negative equity in the car. Issuing sham warranties with a big up-front charge on it that when you go to collect on it doesnāt cover anything.
āWe have to quietly persist in offering a good auto loan product. Weāre really trying to serve what we call a pre-prime marketāthose people who have the worst access to credit and get the highest price, the worst terms and the most abuses.ā
Taylor also laments the failure of the banking industry generally. āOne-third of bank tellers in the United States are on some form of public assistance. They are underpaid so badly they have to access public resources. Thatās a massive shift of a private cost from some of the most profitable corporations in the world to public resources.
āWe lost nearly five million homes in the foreclosure crisis. That was an explicit transfer of wealth that disproportionately punished communities of color.ā
Through Beneficial State, Taylor is looking at different kinds of banking relationships and interactions with the community. āWeāre thinking about how a bank can be not just a network of financial capital but also social and political capital. Weāre going to have to have a place where you can walk into once. If after that you never walk in again, what do we do with this costly infrastructure? That cost gets passed to the consumer ultimately; thereās no way to avoid it.ā
Last year, Beneficial State began using all its California branches for voter registration and citizen applications. In fact, the Fresno branch of Beneficial State served as a polling site in the 2016 general election. āCan we restore the trust in banking institutions so that they will be a trusted place to vote as well?,ā asks Taylor.
An issue throughout the Central Valley is the lack of access to banking services in rural communities. Beneficial has considered a āfood truck kind of bankā as it works to determine the optimal ānew world branch strategy.ā
āWe donāt need to throw up a bunch of brick and mortar,ā states Taylor. āThat would not be ecologically smart, and it isnāt even the way people want to bank. They want to go into a bank once to make a person-to-person connection; this is what the studies show. After that, they just assume they can go to their phone or bank at a more mobile outlet. Weāre trying to figure out if we can be sort of fashion forward in that.ā
āHave patience while we figure out the best way we can be of service,ā says Taylor. āLet us know what the community needs are. Introduce us to important community leaders so we could learn from them and be in partnerships. Come bank with us.ā
āWeāre really a bank trying to make change,ā notes Taylor. āWeāre very open to partnership and community engagement so we can be informed.ā
āOur stakeholders are broad. Theyāre depositors, borrowers, transactors, communities, the planet, the publicāthose are all our stakeholders,ā states Taylor. āThey need to know what weāre doing and they need to voice their concerns if weāre doing something they donāt like.ā
āWeāre a bank where you can align your money with your values and that really matters,ā says Taylor. āThe sleeping giant among us is us. If we put our money only in institutions that respect our value system, and finance the world we actually want to live in, we can be very powerful. Thereās $12 trillion in deposits in the American banking system right now. No single person has enough to move anything, but all of us together, itās a lot like voting. Itās voting with your money.ā
The Fresno branch of Beneficial State Bank is located at 170 W. Shaw Ave. To learn more about Beneficial State Bank, contact 559-271-4733 (Fresno branch) or visit www.beneficialstate.com. To learn about the bankās social and environmental impact, visit beneficialstate.org/impact.
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Michael D. Evans is a political activist, editor and writer. Contact him at evansm@usa.net.