Is this the year to finally change your bank?
As the stock market reaches giddy new highs, it’s worth noting that it was just 10 years ago that a mortgage bubble and risky behavior fueled by the nation’s largest banks brought the economy to its knees. That experience—along with a backlash against the high, often unscrupulous fees charged by big banks—prompted many people to move their money to community banks and credit unions.
The outrage may have dissipated, but moving your money, if you haven’t already, is still a good idea (what’s up with that Wells Fargo account?) It remains one of the simplest steps individuals can take to make a difference in our capital-driven world.
For starters, community banks and member-owned credit unions tend to lend mostly to small and local businesses—a market that big banks have all but abandoned. A growing number of them are driven by a mission to lift up underserved communities, help combat climate change and generally channel capital for social good. Many are B Corps or community development financial institutions (CDFIs).
Best of all, they provide all the services consumers expect, such as ATM networks, free checking accounts and mobile banking, but with lower fees and higher interest rates on accounts. Some newer entrants have adopted online-only models, which bring down costs further. (They’re all chartered and insured by the appropriate agencies, of course).
Here are a handful of banks that are worthy stewards of your money—including some noteworthy newcomers:
Amalgamated Bank and New Resource Bank
You may have missed it in the holiday bustle, but in mid-December, these two banks announced their intention to merge and create “the largest values-based bank in the U.S.”
Amalgamated Bank was founded in 1923 by the Amalgamated Clothing Workers of America and today remains majority-owned by a union and one of the only unionized banks in the U.S. San Francisco-based New Resource Bank was founded in 2006 by a group of shareholders including RSF Social Finance and ethical banking pioneer Triodos Bank, as “a triple-bottom-line bank serving values-driven businesses and nonprofits that are building a more sustainable world.”
Both banks are B Corps and members of the Global Alliance for Banking on Values (GABV). The $58 billion merger, which is expected to be completed by the end of second quarter 2018, will allow the combined company to “scale sustainable banking across the nation to confront the serious climate and social inequities of our time and restore the financial system to its proper role in support of people and the planet,” according to their announcement.
Launched in 2015, Aspiration is a new breed of online-only bank, but one, as it bills itself, “with a conscience.” Aspiration offers high-interest checking accounts, IRAs and fossil free funds—all with a “set your own fee” policy. That means that customers pay what they think is fair, even if that’s zero. (Really!) The bank also donates 10% of its profits to charity. Betting that there is growing demand for conscientious banks, Aspiration recently raised $47 million to fund its expansion.
Beneficial State Bank
Founded by Bay Area power couple Tom Steyer and Kat Taylor, Beneficial is a state-chartered, federally-insured bank that is owned by a nonprofit foundation set up by the pair. All profits go to the Beneficial State Foundation, which is required to reinvest them back into the community. The Oakland, CA-based bank offers products for individuals, businesses and nonprofits, and focuses its lending on affordable housing, sustainable food, renewable energy, women and minority-owned businesses and other “transformative” sectors.
Since its founding in 2007, Beneficial has grown to 12 branches across northern California and the Pacific Northwest, thanks to acquisitions of Shorebank Pacific and, in October 2017, Portland-based Albina Community Bank.
Carver Federal Savings Bank
Carver Federal Savings was founded in 1948 to serve African-American communities whose residents, businesses, and institutions had limited access to mainstream financial services. At a time when many African American-owned banks have struggled— three-quarters of the country’s 91 African-American banks have closed since 1987, according to Crain’s New York—Harlem-based Carver is the largest African-American operated bank in the US, with 10 branches throughout New York City. Eighty-three cents of every dollar deposited at the bank is reinvested in the community. That kind of community-focused banking has earned it a CDFI designation.
Clean Energy Credit Union
The Clean Energy Credit Union is a brand new federally chartered credit union with a mission to help speed adoption of renewal energy by making it more broadly affordable. When it formally launches in February, the special purpose credit union—which operates online only—will offer savings accounts and clean energy Certificates of Deposit (CDs), which will be used solely to finance clean energy projects, from low-cost loans for home solar installation to electric cars and other high fuel efficiency vehicles.
Over time, the credit union plans to add new products, including checking accounts and debit cards for credit union customers; and for borrowers, new clean energy-themed products such as loans for students enrolled in clean energy studies or for companies in the business of renewable energy. (Read our coverage here.)
Sunrise Banks is a family owned national chartered bank headquartered in St. Paul, Minnesota, with a long history of serving inner city communities in Minneapolis and St. Paul. It has also expanded nationally with new product lines, including commercial lending, a prepaid card business, and New Markets Tax Credit and SBA lending. The bank is a CDFI, as well as a B Corp. and a member of the Global Alliance for Banking on Values.
Self-Help Credit Union
Self-Help is a family of two credit unions, a nonprofit loan fund, and an advocacy group. As a CDFI, it serves a broader mission of expanding opportunities for underserved communities. The credit union has created innovative products, including CDs that support women and children, and a new one focused on funding entrepreneurs of color. To further its mission, Self-Help recently received an $8 million infusion from the Silicon Valley Community Foundation.
Spring Bank is a community bank headquartered in the Bronx, New York. It was created in 2007 to provide an alternative to the predatory payday loans and check cashing that were often the only resort for the area’s unbanked residents, at a time when banks had abandoned the Bronx. Spring Bank opened its second branch in Harlem in 2012. Spring Bank is a B Corp. as well as a mission-driven CDFI. “When you deposit your money here, you know that a lot of it is being reinvested in local businesses,” says Demetris Giannoulias, founder and chairman of Spring Bank. “We want to create economic opportunity in New York City.”
So what are you waiting for? Ditch that Wells Fargo account! For even more banking options, check out this handy bank local tool to find banks near you that invest locally.