Shopping for Banks 101

by Caroline Incledon, Community Investment Campaign Organizer

Banks can be friendly, too!

Now that we are working on writing a community investment proposal at Tufts, we are also beginning to narrow down our list of banks. While initially searching for community development financial institutions (CDFIs), the most prevalent topic was the idea of “community”. There are so many CDFIs in the Tufts community of Medford and Somerville, not to mention Cambridge or even greater Boston. Therefore, should proximity to the school be one of the most important factors? Or would a bank with a wider community reach be most effective? These were questions we had to consider.

Next, we needed to research the banks themselves. What were their rates? Are these rates comparable to other banks (such as the bank that your school currently has its money in)? Ratings are also important, and we used independent assessment sites such as bankrate.com or bauerfinancial.com to investigate. On the other hand, try to get a real sense for your banks reputation with local residents. For example, a bank that we were looking at was voted “highly” by small business owners in a local poll. Those factors can be just as significant when choosing a bank. It’s also valuable to get a feel for the bank customer service. Is the bank responsive to your calls? When you arrive at the bank, is your presence acknowledged? One of the main reasons we are encouraging community development banks is their personal touch and commitment to the community, so make sure that you can really see this in a tangible way. Banking with a bank like this might also encourage students to move their money and make the school feel more secure with its decision.

Finally, assessing a CDFI’s community commitment is crucial. This isn’t very hard to do – community banks have a professed desire to work within the community, and they will provide evidence of their initiatives and programs. Once you begin comparing banks, those with exceptionally high commitments will stand out. If you are still unsure, or want to know more about their real impact, you could also independently research some of their community programs. A CDFI with a high and demonstrated community commitment is priority. It will signal to your school administrators the real value of their placing the endowment in the bank and will strengthen town-gown relations so much more than simply moving money into a local bank would. Furthermore, a bank’s extensive community commitments might signal their receptiveness at working with your school later on to create co-curricular opportunities between your bank, school, and the community.

There is a lot that must go into bank research, and it can get confusing. However, try to think about the two “R”s – Reach and Reputation. The bank’s reach refers to its commitment within the community and what that community is; while reputation refers to its literal financial reputation but also its relationships with the community. Your list will inevitably begin to narrow.

Good luck “shopping”,
Caroline

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