Pioneer Press: Sunrise Bank and a nonprofit team to serve the Twin Cities’ ‘unbanked’
“It’s pricey to be poor. Tracy Fischman, executive director of the St. Paul-based nonprofit Prepare + Prosper, points out that low incomes and poor credit will net higher interest rates on home, car and business loans, and can even complicate a job search. Many employers won’t hire an applicant with a troubled financial history. Even home and auto insurance in urban, low-income areas may be more expensive, if the traditional market serves the area at all.”
American Banker: Mobile app for underbanked looks to go national
“You could easily mistake Anne Leland Clark, a Twin Cities nonprofit executive, for a banker with with big, national ambitions as she discusses her organization’s digital platform for the underbanked.
The product, known as Fair Financial, launched in a pilot program this week to serve about 500 local customers over the next 18 months. But Clark and her partners – including at Sunrise Banks in St. Paul – have no plans to stop there, having established a goal of providing 5,000 low-income customers across the country with Fair deposit accounts and small-dollar loans by 2020.”
Minnesota Business: Banking program to provide alternatives for underserved communities
“Twin Cities-based nonprofit Prepare + Prosper has joined forces with Sunrise Banks to launch the pilot phase of its three-part FAIR (Financial Access in Reach) Financial Solution. Designed to aid financially underserved individuals in building credit and savings, FAIR is intended to help reduce the impact of high-cost fees and interest.”
[News Advisory] Prepare + Prosper Launches Pilot Phase of Three-Product FAIR Financial Solution to Address Needs of Financially Underserved
Organization Partners with Sunrise Banks to Issue the FAIR Products to 100 People
Contact:
Cathy Kennedy, Cathryn Kennedy Consulting – 612-309-3951
Pam McCarthy-Kern, Cathryn Kennedy Consulting – 612-360-0647
Stacy Opitz, Prepare + Prosper – 651-262-2162
Saint Paul, MINN. (June 20, 2018) –Twin Cities-based nonprofit Prepare + Prosper, known for annually serving 13,000 low- and moderate-income families with free tax preparation, financial services, and coaching, announced today that it has launched the pilot phase of its three-part FAIR (Financial Access in Reach) Financial Solution. FAIR is designed to help financially underserved individuals build credit and savings and rid themselves of high-cost fees and interest by using products designed especially for them. Prepare + Prosper will partner on the project with Sunrise Banks, a nationally chartered bank headquartered in Saint Paul, Minnesota whose mission is to help people and urban communities thrive by empowering them to achieve financial wellness.
The FAIR Financial Solution is designed for financially underserved individuals (oftentimes called unbanked or underbanked) who do not have access to fairly priced and designed products and often rely on “wealth-stripping” sources such as check cashers, payday loans, and accounts that charge excessive fees. FAIR is unique in providing a scalable approach to solving the financial inclusion gap by bundling consumer-designed financial products with fairer fees, coupled with financial coaching, and offering the products through trusted places in the community where access is lacking.
Individuals interested in enrolling for the pilot phase of the FAIR Financial Solution can visit https://fairfinanceprd.wpengine.com or call 651-262-2173. Prepare + Prosper hopes to enroll 100 people in the pilot phase. People will be enrolled through Prepare + Prosper or through the participating distributors, which include Eastside Financial Center, Build Wealth Minnesota, or our corporate partner focused on assisting their employees, New Horizon Academy.
The Problem
Too many people’s financial situations are volatile and many lack access to financial products that work for them. One in three Americans has no savings, according to Pew Charitable Trusts, making it difficult to withstand an emergency. According to the Prosperity Now Scorecard, 33.5 million households in the United States are excluded from the financial mainstream. Of those households, 44 percent are households of color, as compared to 19 percent that are white households. In the Twin Cities, there are 254,436 financially underserved households, based on Federal Deposit Insurance Corporation (FDIC) 2015 data. Alarmingly, the most recent FDIC data broken down by race found that 54.8 percent of households of color were financially underserved in the Twin Cities, as compared to 15.4 percent of white households.
There are many reasons traditional banking doesn’t entirely work for people. Research from the FDIC and Prepare + Prosper show that many who are financially underserved do not trust banks, want to avoid often unpredictable fees, or don’t have enough money to maintain an account. There is also a perception that bank accounts are not for households with low incomes. More than half of those included in the FDIC report said they believe banks are “not at all interested” in serving households like theirs. According to the 2017 Market Size Study presented by Center for Financial Services Innovation (CFSI), consumers spent $173 billion in fees and interest.
“The financial inclusion gap is a big problem in the U.S. and in Minnesota. It negatively impacts people’s economic footing, well-being, health, and more, and not enough people are talking about it,” said Tracy Fischman, executive director of Prepare + Prosper. “People need financial products and a system that work for them and not against them as they strive to be financially successful.”
“For Sunrise, we work every day to do well by doing good,” says Sunrise Banks CEO, David Reiling, “Collaborating with Prepare + Prosper on the FAIR Initiative is giving people the tools they need to improve their financial wellness. We’re setting an example for many financial institutions to follow, and working to change the way they do business.”
“We are proud to partner with Prepare + Prosper on the FAIR initiative” says Chad Dunkley, CEO of New Horizon Academy. “We are continuously looking for ways to support our employees and have increased our focus on assisting our employees to improve their financial health. The partnership with Prepare + Prosper is an opportunity to support employees and their families.”
The Solution
To help families gain financial well-being, the FAIR Financial Solution, issued through Sunrise Banks Banks, will include tools to:
- Transact through a checking account – With no account overdraft fees or monthly minimum balance requirement;
- Save through a savings account – No monthly minimum balance requirement or monthly fees;
- And build credit through a credit-building loan – A loan deposited and saved into a CD. On-time payments to unlock the CD can help build credit.
Also, unique to FAIR, is that these products will not rely on bank branches for delivery, but instead will be offered to people where they work or receive services, such as nonprofit organizations and employers. This delivery model is based on the input of more than 150 financially underserved consumers who participated in listening sessions, which shaped the FAIR design and structure.
Another key aspect of the FAIR Financial Solution will be enhancing technology and tools to support customers in working toward their goals and building financial confidence along the way. The technology and tools will be centered around human behavior and may take the shape of texts, apps, or social motivators to support continual savings and credit building.
The FAIR Roll-out
Participants in the FAIR pilot project will be selected from Prepare + Prosper customers, as well as those served by partnering organizations. Plans call for FAIR product offerings to expand throughout the Twin Cities and Minnesota to 500 people beginning in January 2019.
“Our community, like far too many throughout the region and country, has a plethora of costly financial services which reinforce the widening wealth gap. The FAIR Financial Solution is an exciting and welcome answer to help us move families toward financial health. We have been at the FAIR table since the beginning because we and our community are hungry for innovative solutions, and we’re delighted to be among the first out of the gate to test FAIR’s unique delivery model,” said Eva Song Margolis, Eastside Financial Center.
The FAIR initiative grew out of a call from the Northwest Area Foundation (NWAF) in 2013 to convene cross-sector leaders from across the Twin Cities to increase the financial health and wealth of the financially underserved population. Among the leaders of this group were members of the banking community, nonprofit sector, and city and county government leaders. FAIR receives funding from NWAF and several other funders across the country including The McKnight Foundation, The Minneapolis Foundation, JPMorgan Chase Foundation, Otto Bremer Trust, and Minnesota Department of Commerce.
About Prepare + Prosper
Prepare + Prosper is a nonprofit focused on building brighter financial futures for low- to moderate-income individuals and families. It provides free tax preparation; financial services, products, and coaching; and works to advance policies and practices that directly benefit the people it serves. In 2017, 532 volunteers prepared taxes for 12,648 taxpayers who received $24.7 million in refunds; 984 of those taxpayers committed to saving $1.54 million of their refunds. For more information, visit www.prepareandprosper.org, Facebook, and Twitter.
About Sunrise Banks
Based in St. Paul, Minnesota, Sunrise Banks seeks to radically change the way urban communities and people thrive by empowering them to achieve financial wellness. Sunrise is certified by the U.S. Treasury as a Community Development Financial Institution (CDFI), a designation earned by approximately 100 banks nationwide. Sunrise Banks is also a member of the Global Alliance for Banking on Values, a public benefit corporation and is a certified B Corp for its demonstrated commitment to transparent corporate governance and positive community impact. Visit Sunrise Banks at SunriseBanks.com, on Twitter @SunriseBanks, or on Facebook. Sunrise Banks is Member FDIC.
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Star Tribune: New program aims to provide lower-cost alternative to payday lenders
“Twin Cities-based nonprofit Prepare + Prosper and Sunrise Banks will announce Wednesday a multiyear plan to provide thousands of low-income families with an alternative to payday lenders and check-cashing operators.
The Financial Access in Reach (FAIR) plan is aimed at providing “financially underserved” people with access to a checking, savings and small-loan program at a modest cost.”
Star Tribune: Nonprofit Prepare + Prosper helps Minnesota families claim $24.6 million at tax time
“The tedious annual ritual of tax preparation is a chore for many Minnesotans.
Nonprofit Prepare + Prosper sees the yearly accounting as something else — a multimillion dollar “money moment,” when families in need get some help on tax preparation and, with a return coming their way, some financial coaching on savings, emergency funds and a more stable future.
“There is no better time to think about saving,” said Prepare + Prosper Executive Director Tracy Fischman. “We really have an opportunity to focus on the financial well-being of low- and moderate-income families.””
Finance & Commerce: How money worries affect job performance
“Approximately one in five employees admits to skipping work to deal with a financial problem, according to a MetLife study. The average worker spends 13 hours per month worrying about money at work, per Mercer. And an unexpected expense of $400 qualifies as a financial emergency for nearly one in two households, says the Federal Reserve.”
Finance & Commerce: Turning ‘unbanked’ into savers
“Stephanie Smith, a special education teaching assistant and mother of two, has worked for years to get her finances in order. But she thought checking accounts weren’t for her. Many banks have minimum balance requirements and high fees for overdrafts — things that don’t work in her life, she said. But on Monday that changed.”
Star Tribune: Guaranty Bank, St. Paul nonprofit launch financial bundle for those with banking needs
“Thousands of Twin Citians are without a banking account. For them, just to use and save the money they earn can be an expensive hassle.
St. Paul nonprofit Prepare + Prosper will launch a bundle of products on Tuesday for low-income, financially underserved individuals to build their credit and savings and avoid the high-cost fees and interest that services like check cashiers and payday loan providers charge.
The three-part FAIR (Financial Access in Reach) financial solution, with partner Guaranty Bank, includes a checking and savings account with no overdraft fees and minimum balance requirements as well as a credit-building loan that a customer will pay toward each month.”
Star Tribune: TCF launches new service aimed partly at the 'underbanked'
“Banks are starting to make a bigger play for a market they’ve long ignored: people without a traditional bank account.
The latest company to aim for customers outside the financial mainstream is TCF Financial. The Wayzata-based company is rolling out a service called ZEO at its 342 branches Monday that enables customers to cash checks, start a savings account, deposit money directly to a reloadable prepaid debit card and pay bills — all without a standard checking account.
The services are sold as a low-risk way for customers to disentangle themselves from the world of check-cashing firms and payday lenders. There’s no minimum balance required on the savings account and no chance of overdraft fees.
But they are also a way for banks, in an era of moderate revenue growth, to attract millions of new customers and drive traffic to branches.
“We’re seeing efforts by traditional banks and credit unions to create new or tweak existing products to market to a population that is not traditionally served,” said Tracy Fischman, director of Prepare + Prosper, a St. Paul nonprofit that helps low-income people with their taxes. “There’s a growing recognition, and I think there’s also growing pressure from policymakers.””