🔒Banks build relationships, trust with financial literacy

Connecticut banks are increasingly using financial literacy programs to help cement relationships with customers, though local executives say public service is the goal, not marketing.

“There's selling someone and there's educating someone,” says Kenneth F. Burns, executive vice president and director of retail banking and marketing at Farmington Bank. “When you find a banker who you can listen to, and they're talking to you and educating you, and you can make a decision, that forms a natural trust.”

At the same time, Burns explains, “If we're not out there educating people, we're not going to get new customers.”

Waterbury-based Webster Bank executives agree, and say collaborating in financial literacy programming benefits the consumer, local community, economy and bank. Such programs, presented by banks and Junior Achievement (JA), the United Way, and other groups, or by the federal government as a “Money Smart” course, help lead youth and adults alike to financial institutions for guidance or products.

“To the extent that someone was positively influenced by a Webster banker and came to us to meet their financial goals, that [result] would be a victory for us,” said Tim Bergstrom, Webster's Greater Hartford regional president, “but it's more about putting our values in the community and having a positive impact on youth and doing the right thing.”

A 2007 Federal Deposit Insurance Corp. (FDIC) study on the impact of its Money Smart financial education curriculum, updated through 2012, finds statistically significant improvements in the willingness of consumers who take the course to connect to banks and strengthen those relationships.

The Money Smart curriculum includes everything from basic banking services like using checking and savings accounts to borrowing fundamentals and more elaborate lessons about credit history, credit cards and homeownership.

After participating in Money Smart, 43 percent of 631 program graduates with no checking account and 37 percent of graduates with no savings account opened accounts.

Moreover, 28 percent of graduates with checking accounts and 22 percent with savings accounts by the end of the course began using direct deposit for the first time, the study found.

“The sheer size of the markets represented by students, immigrants, and low- and moderate-income households and their need for money management skills make a clear business case for banks to offer financial education programs,” the study states.

Farmington and Webster banks have both used the Money Smart program, executives said, as well as other initiatives that tap into both youth and adult populations.

In a recent workshop for parents and middle school students connected with Hartford Youth Scholars, Christine Traczyk, Farmington Bank's vice president and community development manager, says managing college on a family budget, or putting money aside in savings are the lessons used to help participants budget their money.

At Webster, programming ranges from connecting consumers to a food bank's food pantry on wheels and teaching them about spending and saving, to using games and role-playing to teach fifth-graders about global trade and what it means to save, said Kathy Luria, Webster's senior vice president of community affairs.

The latter program was held this past year at Tinker Elementary School in Waterbury as part of “JA in a Day,” a K-5 curriculum designed by Junior Achievement, she said. About 70 bank volunteers participated in that one program, she added.

On average, Webster staffers participate in about 130,000 hours a year of volunteering for financial literacy across the company's Northeast footprint, Luria said.

At Farmington Bank, a core group of about 15 employees direct various programs, with another 30 employees volunteering to help, Traczyk said. The bank estimates employees conducted 124 financial education workshops in 2015, resulting in approximately 451 hours of education. The bank is just beginning this year to track the number of participants it helps, reaching a total of 1,750 from January to mid-November.

Whether workshop and course participants are converted to clients is a question these bankers can't answer, because they don't track it, but both say that is not the primary aim, but rather an inclination they hope to impart.

“The more a person understands how finances work and how they can manage their money better, the more those Americans are likely to add another financial service to their array,” Traczyk said.

Burns cites three growth areas for Farmington Bank: Hispanic and Asian customers and Millennials.

And for the “unbanked” or “underbanked,” consumers can and do learn, for instance, that they could be paying a third of the price to cash a check at a local bank instead of at a check-cashing facility, he said.

Based in Hartford, Junior Achievement covers the entire state, with the exception of Fairfield County. Last year, JA set a record of serving 39,915 kids through all programming – and about half of them through financial literacy alone, said President and CEO Jeremy Race.

“We're hopefully preventing higher debt ratios and people from filing for bankruptcy and helping them save for retirement [as they age],” Race said. “We teach the difference between needs and wants, getting kids to understand concepts [like] the power and danger of credit.”

Farmington and Webster banks are both “extremely supportive,” he said.

“They impact literally thousands of young people,” Race explained.

The value can be illustrated by a young girl's inquiry after learning about budgeting several years ago at Pulaski Middle School in New Britain.

“Can you teach this to my Mom?” the girl wanted to know, Race said. “It was a heart-wrenching moment.”