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Insight Center Community Bank

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Reaching the unreachable

Financial institutions are increasingly using acquisition solutions to attract low- and moderate-income account holders to help meet compliance goals for the Community Reinvestment Act (CRA). Established in 1977 to help reduce discriminatory credit practices such as redlining, the CRA requires financial institutions to meet the credit/banking needs of the communities in which they operate.

Financial institutions have struggled to ensure investments in low-income communities provide the necessary returns to be profitable. This is a growing concern as the US population of unbanked and under-banked is expanding.

Understanding is key
First and foremost, banks and credit unions need to understand the needs of the people in these communities. Many of them, for example, cannot make it to a branch during normal business hours but still need to access their funds. They may not even have a traditional checking or savings account, because of lack of time or money or both. How can financial institutions serve these people’s financial needs?

One option is payroll cards. These are cards that a person’s employer deposits their paycheck onto, ensuring funds are available just as quickly as direct deposit but without the required account.

But how can financial institutions reach these potential consumers if they don’t currently bank, don’t have credit (or have very low credit), and don’t come knocking on the branch door?

Acquisition solutions can help banks and credit unions target customers in a specific location to meet product and CRA goals. These tools help identify potential consumers who are most likely to respond to a personalized offer, promoting growth in the very areas a financial institution wishes to grow.

Sounds easy enough, but how does it work in practice?
Using segmentation tools, financial institutions can target prospects at the postal carrier-route level and deliver low-cost direct mail. It’s possible to identify neighborhoods based on median income, percentage of the population below the poverty line, on public assistance and unbanked.

With these segmentation tools, the right personalization and offer, banks and credit unions can acquire new account holders and reach their CRA compliance goals more easily.

> Learn how Harland Clarke can help you reach your CRA and other goals