DEC 26, 2013 2:58pm ET

Oakland entrepreneur Nai Saeturn has had plenty of success attracting customers to the video production and marketing company she founded in 2006, but she hasn't always been adept at running the business side of the operation.

For a long time, Saeturn didn't have a business checking account and never really paid herself – even though her company was profitable.

Then, a few years ago, Saeturn signed up for a small-business seminar at an Oakland branch of Bank of the West run by the financial literacy nonprofit Operation Hope.

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By the end of the 12-week class, Saeturn had learned to plan a budget, create a business plan and develop strategies for growth. She had also opened a business checking account with the $65 billion-asset Bank of the West.

"That was a huge help," she says. "If it wasn't for that I would have depended on check cashing, which would have taken a huge chunk out of my checks for fees."

The Hope Inside program offers free financial education and counseling inside bank branches, grocery stores and other high-traffic locations with a goal of helping underbanked consumers and small-business owners better manage their money and move into the financial mainstream.

The program has existed since 2004 in a handful of West Coast banks, including Bank of the West, a unit of France's BNP Paribas, and UnionBanCal, a unit of the Bank of Tokyo-Mitsubishi UFJ Ltd. Buoyed by its success on the West Coast, Operation Hope took the program nationwide in 2013. It struck partnerships with the likes of SunTrust Banks (STI), Wells Fargo (WFC), Regions Financial (RF) OneWest Bank in Pasadena, Calif., and Popular Community Bank, a unit of Popular in San Juan, P.R. — and it's not planning to stop there.

Though it has just 25 Hope Inside locations now, Lance Triggs, the chief executive of Operation Hope's Los Angeles division, says the nonprofit is aiming to have a presence in as many as 6,000 bank branches by 2020.

"We want consumers to transition from being payday lending customers and check cashing customers into traditional banking customers," he says

Banks that participate in Hope Inside pay the salaries of trained nonprofit staff for a minimum of two years in order to provide in-branch guidance and seminars on first-time homeownership, credit counseling, money management, earned income tax credits and entrepreneurship.

Triggs says the program's fundamental purpose is to improve Americans' financial well-being, but it can also translate into new business for the partner banks.

"From a business perspective, [the Hope Inside program] can increase banks' customer base in terms of depository customers and lending customers for homeownership and small businesses," says Triggs.

For example, an Oakland branch of Bank of the West has offered financial literacy training to 16,000 adults since 2005 and, through credit counseling, helped to improve the credit scores of roughly half of them within six months. It also lent $20 million to roughly 1,500 participants that later applied for mortgages and small-business loans.

Partnering with Operation Hope can also help banks meet the service and lending requirements of the Community Reinvestment Act. "From a regulatory perspective, it shows that they are good corporate and community citizens," Triggs says.

Of course, banks could offer financial literacy programs on their own, but Jenny Flores, community affairs manager at Bank of the West, says that partnering with Operation Hope makes it easier for banks to reach unbanked or underbanked consumers.

"There are individuals who come to the Hope center with poor credit or having never had a relationship with mainstream financial institution," she says. "Operation Hope, by lending their brand, helps individuals trust banks and creates confident, well-informed consumers. Banks can't do that on their own."

Banks are largely setting up the centers in inner cities. Popular, for example, has committed roughly $150,000 to establish financial literacy centers in the Harlem and Bronx areas of New York City. SunTrust has opened Hope Inside branches in Memphis and Atlanta this year and is expected to establish two more Washington, D.C., branches by the end of the year.

Banks that are new to the program say they are encouraged by the success of Operation Hope's existing partnerships with Bank of the West and the $105 billion-asset Union Bank

A Long Beach, Calif., credit counseling program supported by Union Bank in 2013 helped participants lower their average debt by nearly $1,400 while boosting their average credit score by 24 points. Overall, Hope Inside's credit counseling programs have improved participants' credit scores by an average 90 points over a 12-to-15 month period, according to Operation Hope.

The data suggests that Hope Inside has real potential to transform communities, says SunTrust's Dan Mahurin, whose title is financial well-being executive. Hope Inside centers have opened in SunTrust branches in Memphis and Atlanta this year and are expected to be up and running in two Washington, D.C., branches by the end of the year.

"The way you build your bank is by building your community," Mahurin says. Operation Hope's financial education programs "can help take away the stress that 70% of Americans say comes from money. You can literally improve on a community's well-being."

As SunTrust ramps up its outreach, it has been working with Operation Hope to generate referrals from local not-for-profits and members of the business community.

Meanwhile, the nonprofit is trying to broaden its reach by beefing up its training programs so that bank staffers can be certified to run financial literacy workshops and provide one-on-one counseling. Training bank staffers would go a long way toward helping Operation Hope gain a presence in thousands of more branches, Triggs says.

Banks that partner with Operation Hope can also participate in other organizational initiatives, including Banking on Our Future. Th
at program sends nonprofit volunteers into schools to educate students about financial literacy. Bankers can also speak to students as part of the curriculum, giving them a a hands-on opportunity to connect with people they might not otherwise reach, according to Julius Robinson, Union Bank's executive vice president and head of corporate social responsibility.

Robinson frequently speaks with Los Angeles students about his own background growing up in a housing project in South Central Los Angeles.

"My passion really comes from the idea that many of these kids come from backgrounds not unlike the one I had when I was growing up," Robinson says.

By working with Operation Hope, Robinson says he tries to show children in low-income communities that "they don't necessarily have to be an outstanding three-point shooter or have a clever [song] lyric" to achieve success.

"There are really more defined, and in many cases easier to obtain, paths to financial prosperity," he says. "But what it takes is a degree of discipline and focus, and that's what we try to do."

As republished from the American Banker newspaper.

HOPE Inside is a core component to Project 5117.


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