Dear reader,
Welcome to the sixth edition of The Forum File. With this newsletter, we’re focusing on how our members have worked to remove barriers for underserved populations and expand banking services across the country to create a more inclusive economy.
We appreciate your readership and hearing your feedback.
Kevin Fromer, President and CEO, Financial Services Forum
Penny For Your Thoughts
“For us, it’s about human connection – personalized financial guidance, while also giving our customers the benefit to bank wherever and however they want.”- Jennifer Roberts, Chase Consumer Banking CEO
Chase recently announced that it expanded its retail branches to all 48 states in the contiguous United States, the first of any bank. Can you tell us more about this milestone and how you got there?
In 2018 we committed to expand our branch network to 20 new markets across the U.S. These were markets where we already had a strong customer base, including through our credit cards, or larger client relationships through Commercial or Investment Banking. We knew that the physical retail presence was what was missing, as it would give more customers expanded access to our products, digital tools, and tailored in-branch experiences, like financial advice and financial health workshops.
At the time, we had branches in 23 states, and in the first year expanded to large cities like Washington D.C., Philadelphia and Boston. The response locally was incredible, and account openings and performance far exceeded our expectations for branches in new markets.
This feedback allowed us to accelerate our expansion to reach all lower 48 states, which is an incredibly important milestone for us. We can now serve millions more customers and businesses across the country, including many communities that have traditionally been underserved, and create thousands of new jobs. As part of our expansion efforts, we’ve hired nearly 2,500 employees to work in our branches, 80% of whom are right from the local community where the branch sits.
Even with the rise in digital banking, especially in the COVID crisis, Chase is still opening branches. What’s the strategy there?
We are big believers in our branches. We see them as community anchors, connecting neighbors and local businesses to the right financial resources to meet their needs.
This was especially true during the pandemic. While we saw more customers turn to digital channels to make everyday transactions, they still sought out the branch for in-person advice for help through challenging times – whether it was to discuss a loss of income or supporting their elderly parents. Despite the challenge of the last year, we were still able to open nearly 200 branches across the country from March to December 2020.
The difference is that with digital, we need fewer branches in a market than we did five or ten years ago and can serve just as many customers – if not more. Customers can do most of their daily transactions online or through our mobile app, but with branches – which we place in locations based on where customers live, work and shop – we’re able to offer more personalized financial health tips and education.
We’re also being more creative with how we think about the customer experience in the branch and bringing together physical and digital channels. We just started testing what we call ‘bank on wheels’ – a 385 square foot truck that has wi-fi, lobby space, private meeting rooms and an ATM that is driving between two towns in rural West Virginia. This format allows us to meet our customers where they are, making banking easier and giving them more choice and convenience, while optimizing how we enter new markets.
What does the future of branches look like at Chase?
You’ll see us continue to innovate for our customers, whether it’s in the branch, through digital and mobile, or new customer channels. The important thing is that we offer customers flexibility and choice so that they bank with us wherever or however they want to, while getting a consistent and seamless experience, no matter the channel.
Prior to the pandemic, we began piloting a new channel called virtual banking, a way for Chase customers to establish a relationship with a banker over the phone instead of coming into the branch. This channel has been so important as many customers haven’t been able to leave home, but still value human interaction and advice when it comes to their finances. We also offer customers the ability to schedule meetings – in branch or virtually – including after traditional banking hours to offer more flexibility.
And understanding that branches aren’t one-size-fits-all, we’re introducing new formats tailored to local community needs. We recently opened new Community Center branches, including in Stony Island in Chicago and Oak Cliff in Dallas, that offer more space for community events, financial health workshops, and small business pop-ups.
For us, it’s about human connection – personalized financial guidance, while also giving our customers the benefit to bank wherever and however they want.
Value Add
Member program spotlight
Exploring how to expand the credit box in a safe, responsible and sustainable way
Finding new ways to improve how we assess the credit worthiness of the 50 million Americans who lack a credit score is an important challenge for the banking industry, credit bureaus, regulators, legislators, community organizations and technology partners to solve.
In our view, making sustainable and responsible progress in this area is beneficial to consumers and the entire financial services industry.
To this end, we gladly accepted the invitation from the Office of the Comptroller of the Currency (OCC) to meet with leading thinkers and consider options that would help our industry responsibly expand on traditional definitions of credit worthiness through Project REACh.
We are also partnering with Early Warning Services, LLC to build on what we’ve already learned over the last five years and begin expanding the insights we consider for credit decisions to include deposit activity for roughly 700,000 “credit invisible” customers. We look forward to exploring how we can evolve future underwriting models using the alternative data banks provide.
We’re beginning with deposit account information and as we gain experience we’ll consider expanding into other areas, such as rent, utilities and other payment information. While we are deliberate about evaluating how to best expand the credit box, we will ensure it is done in a safe, responsible and sustainable way. The stakes are too high to do it any other way.
Capitol Gains
What we’re doing in Washington
We advocated for the passage of the Adjustable Interest Rate (LIBOR) Act to address “tough legacy” contracts that currently reference London Interbank Offered Rate (LIBOR), which expires in June 2023. This legislation would allow trillions of dollars of hard-to-modify financial contracts, securities, and loans that use LIBOR to either convert to a non-LIBOR rate or be amended to add adequate fallback language.
Responding to a proposal from the Basel Committee on Banking Supervision, the Forum and other financial services trade associations welcomed the focus on designing a global prudential framework for cryptoassets. The associations noted the importance of global standards to ensure regulated banks are able to meet the demands of consumers and businesses.
The Forum joined several other trade associations representing financial institutions of all sizes in a letter fully supporting Congressional efforts to raise the federal debt ceiling without delay. A failure to act would negatively impact the creditworthiness of the United States to the detriment of financial stability and the overall economy, the associations said.
In addition, we reiterated that the largest banks in the United States remain strong, well-capitalized and a source of strength during the current global health pandemic, continuing to support American consumers, businesses and communities and a robust, inclusive and sustainable economic recovery.
- Capital requirements for the eight largest U.S. banks have increased over the past several years—not decreased. On average, regulatory capital requirements – inclusive of buffers – more than doubled from 4.5% in 2015 to 10.6% in 2021.
- Liquidity requirements for the largest U.S. banks have also increased. The 2021 finalization of the Net Stable Funding Ratio further enhanced the stringency of liquidity requirements applied to Forum members.
- The Federal Reserve conducts stress tests of the largest financial institutions in the country at least once a year. As part of this process, the Fed uses a hypothetical economic loss scenario substantially worse than the 2008 financial crisis. While these theoretical losses are substantial, they are consistently a fraction of the capital held by Forum member banks.
Our Two Cents
Research from the Forum
The BankNotes Blog Spotlighted:
- The Forum members continued to focus on providing loans to small businesses as the Paycheck Protection Program extended into 2021, according to data released by the Small Business Administration (SBA).
Checking the Balance
Members in the news
Bloomberg recently reported on Bank of America’s new overdraft protection program Balance Connect, which allows consumer and small business clients to link their checking account to up to five other Bank of America accounts. The firm also announced that over three million clients now use SafeBalance Banking, an account that has no overdraft fees and helps clients manage their day-to-day finances. The company’s Balance Assist product, which became available nationally in March, will soon surpass 100,000 loans. The program offers an affordable way for eligible clients to manage their short-term liquidity needs.
BNY Mellon announced that several of its employees were recognized for their contributions to gender diversity in the workplace by being named to the 2021 HERoes Women Role Model Lists. The lists recognize female and male leaders who elevate female talent and encourage diversity in the workplace. The bank was also named one of Fast Company’s Best Workplaces for Innovators for 2021. This annual list recognizes the top 100 businesses that inspire, support and promote innovation at all levels. BNY Mellon was specifically recognized for its investments in infrastructure to support innovation.
Citi announced the launch of Bridge built by Citi, a new lending platform that helps small and medium-sized businesses connect with various regional, local and community banks online for loans up to $10 million. The development and launch of Bridge built by Citi is part of the company’s long-standing commitment to inclusive access to capital and support of innovative, digital-first solutions in financial services.
The Wall Street Journal covered Goldman Sachs’ partnership with The City University of New York and a pair of other financial firms to create CUNY Futures in Finance, a comprehensive workforce development initiative to cultivate and train CUNY students for careers in the financial industry. The initiative will launch at three CUNY colleges and plans to expand to more schools over time. The funding will provide internship opportunities, career-development staff and help with post-college hiring.
JPMorgan Chase committed $1 million to supporting servicemembers and veterans, and to aid Afghans seeking better lives. Through contributions to Blue Star Families and Iraq and Afghanistan Veterans of America, the firm will support mental health care and other services for those in military and veteran communities who have been touched by the conflict, including the bank’s employees and families. The firm is supporting resettlement for Afghans through contributions to the International Rescue Committee.
Morgan Stanley through its Alliance for Children’s Mental Health launched a Reemergence Program to provide support and resources for families and educators addressing children’s mental health issues leading up to the 2021-2022 school year. This multi-faceted program aims to help teens re-engage with school and their daily activities. Key components of the program include a national survey of U.S. teens and high school educators, tip sheets, digital resources and a convening for educators.
State Street was named to Seramount’s 2021 Inclusion Index for the financial institution’s commitment to advancing diversity, equity and inclusion in the workplace. Additionally, the bank’s Latin American Professional Network was named a Top 25 Employee Resource Group by the Association of ERGs & Councils.
Wells Fargo is providing nearly $11 million in additional grant funding to seven legal-assistance organizations and 12 housing counseling agencies to help keep people housed as millions face housing and rental instability due to the COVID-19 pandemic. Funding will provide urgent housing counseling and legal assistance services to help more than 250,000 people stay in their homes.