Never a better time for financial education initiatives

Today, banks and other financial institutions have an incredible, yet often overlooked, business opportunity. Banks investing in corporate impact initiatives such as K-12 financial education have found they can meet regulatory requirements and reinforce community trust and transparency, while nurturing the next generation of financial customers. Far from corporate charity, financial education initiatives enhance the competitiveness of a bank while advancing the economic and social conditions in the communities in which it operates.

There’s no other business development or community impact initiative that meets all those goals at once. It’s why more banks and financial institutions have invested in K-12 financial education initiatives, including UBS, First Bank, HSBC, TD Bank, M&T Bank, EverBank, Key Bank, Truist, Santander and many more.

Ray Martinez image
Ray Martinez

Financial education initiatives come in many forms but center on the idea that companies can — and should — fund the scalable deployment of curricula that address under-taught subjects such as personal finance, enabling educators to implement these programs at no cost to schools or taxpayers.

Some programs are turn-key and managed by partner companies, meaning they can quickly be implemented in schools leveraging existing infrastructure and expertise. Lessons typically cover saving, investing, managing student debt, and practical advice on opening bank accounts, budgeting, and maintaining credit scores.

Here’s why these corporate impact initiatives are an important opportunity, along with some tips to get started:

Purpose-driven banks achieve better results, meet reg requirements

Today, top-performing companies know corporate impact is a business imperative. That’s because research has shown purpose-driven companies with a clear perception of authenticity see higher market share gains and grow three times faster on average than their competitors, all while achieving higher customer and employee satisfaction.

Purpose and authenticity are especially important to millennials and Gen Z, who want to buy from and work for companies that align with their values. A recent McKinsey & Co. survey found that among those who said they recently switched brands, the biggest reason was the company’s purpose and alignment with their values. As millennials, Gen Z and younger generations become the dominant American consumers, the importance of purpose will only grow.

Corporate impact initiatives have historically been passion projects of a founder or CEO or considered discretionary spending. Today these initiatives are rightly understood to be core to business goals with more banks hiring an executive to lead impact activities and providing visibility to the C-suite. Initiatives are directly measured and tied to core business metrics such as revenue, employee retention and recruiting.

Governed by policies and operating practices, these initiatives provide shared value and enhance the competitiveness of a company while advancing the economic and social conditions in the communities in which it operates.

For banks, an initiative focused on financial education can also help meet regulatory requirements, such as the Community Reinvestment Act. Among the changes included when the new joint final rule was issued that CRA professionals should be mindful of are financial literacy credit, new bank size caps, retail lending assessment areas, and transparency and benchmarking.

Under the CRA regulations, banks get a rating of Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. The new final rule makes these ratings much more transparent and accessible to the public, and most banks will want to earn and promote an Outstanding rating.

Banks can make an outsized impact on financial education

K-12 education is facing headwinds from multiple fronts. Reading and math scores have fallen to their lowest level in decades and nearly one-third of educators are thinking of leaving their jobs. To help offset these challenges, schools received an unprecedented surge in federal funding during the covid pandemic. Now, those funds are almost gone, and schools are struggling to fill the gap.

The opportunity gap between our poorest, most vulnerable students and the most affluent has existed for centuries, but in the wake of the pandemic, it’s widening even further.

Educators know critically important subjects such as basic personal finance have the potential to help close this opportunity gap. Twenty-five states now require schools to offer a standalone personal finance course in high school, however, these mandates are often unfunded.

That’s why banks can play such an important role in making financial education accessible to our nation’s students, especially those from low- and moderate-income households.

 Getting started

Interested in exploring a financial education-based corporate impact program? Here is practical advice to get started.

  1. Discuss what’s authentic to the business and what could resonate with stakeholders such as the board, C-suite, employees, and customers. Make sure any initiative fits into the company’s broader strategy and brand goals.
  2. Determine where the initiative lives within the company. Does it report to the C-suite? By centralizing and elevating social impact programs, companies ensure they create shared value.
  3. Be purposeful about what is being measured, whether it’s CRA requirements, hiring, employee retention, customer acquisition, brand loyalty, or some combination. As the adage goes, what gets measured and reported gets done. 
  4. Explore digital solutions and AI-assisted software to measure and track investment, speed reporting, and assist in scaling.

A rare business opportunity

Banks have an incredible opportunity to meet multiple business objectives by focusing corporate social impact initiatives on K-12 education. By taking a strategic, operational approach to these initiatives, they can meet regulatory requirements, reinforce community trust, nurture new customers, and bolster their brand, all at the same time. Today, forward-looking banks are proving that focusing on community needs can help their bottom line, while providing shared value across the organization. 

 Ray Martinez is Co-Founder and President of education technology company EVERFI from Blackbaud. He leads the company’s financial education business unit.