First Accounts: Combining HighTouch and HiTech Ways to Bank the Unbanked

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First AccountsCombining High-Touch and Hi-Tech
Ways to Bank the Unbanked

• Margaret J. Henningsen
• Founder and Vice-President

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Legacy Bank

• Based in Milwaukee, Wisconsin
• 185 Million in Assets
• Approx 4,500 customers
• Opened for business in July 1999
• First women in the history of state to charter a
  commercial bank
• First woman founded bank holding company in the
  country
• Fastest growing community bank from 2002-2004
• Awards/grants of over 2 million

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Genesis of the Strategy

• Major banks did not meet the needs of the
  community, i.e. closed branches in target
  communities, reduced services of remaining
  branches
• No one focused on serving the underserved and/or
  banking the unbanked
• Personal experience of the founders barriers to
  getting all of the deals done

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First Accounts Strategy

• Partnerships with nonfinancial institutions to
  attract customers
• Strong educational component
• Effective Account Monitoring System
• Incorporated into mission

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Performance to Date

• Average number of customers consistently exceeded
  1,000
• Anticipate 20 of those customers to become loan
  customers per year generating interest and fee
  income
• Brings in deposits - over 9 million in two
  years
• Generates additional business from traditional
  market

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Paths to asset Building

• Customers use other loan products and move from
  the unbanked product to other bank products such
  as CDs.
• Noticeable behavior changes as average balances
  have continued to increase during the term of the
  pilot program

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Critical Success Factors

• Commitment to educational component
• Formation of partnerships with institutions that
  serve the target market
• Product that fits needs of the unbanked

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Challenges

• Time consuming more than we expected in the
  beginning
• High maintenance customers who rely on the bank
  for advice and for follow-up when things go
  wrong(customer has overdrafts or suspected fraud)
• Trial and error with the products in the
  beginning

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Institutional Fit

• Any financial institution can implement a
  product/program for banking the unbanked.

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For more information
Margaret J. Henningsen Legacy Bank 2102 West
Fond du Lac Avenue Milwaukee, WI
53206 414.343.3003 Mhenningsen_at_legacybancorp.com w
ww.legacybancorp.com