AFI Grantee Successfully Partners With a Local Bank

Banks play a central role in the management and success of Individual Development Accounts (IDAs). Though building a relationship with a bank is sometimes perceived as a hurdle, one Tennessee grantee has discovered that banks can be active partners adding value at all levels.

Martha Metcalf, an IDA program specialist at the Upper East Tennessee Human Development Association (UETHDA), explains that the key to getting banks on your side is to sit down and talk to them about your IDA program. Banks are often skeptical at first, Metcalf says, but as they learn about IDAS, they realize IDAs are good business. By tapping into IDAs, banks increase their long term customer base.

In return for referral business, banks can do many things to advance AFI projects. Tennessee’s Green Bank granted an UETHDA IDA participant 6 months to get a conventional mortgage after she bought a home, allowing her to acquire a much lower interest rate. Other banks have offered free financial education programs to UETHDA’s IDA participants, waived fees on IDAs, and matched some of the Federal AFI grant funds. Friendly banks can make grantees’ lives easier as well, Metcalf says. Many banks are willing to send savings account information to UETHDA monthly, and to smooth over logistical challenges by emailing or faxing reports to UETHDA.

When building a relationship with a bank, Metcalf says, the most important thing to emphasize is how both organizations can help each other. Banks refer customers to UETHDA when they think an IDA would be a good fit, and Metcalf refers IDA holders to banks. Many banks have even requested promotional brochures to hand out to customers. The brochures have become valuable tools that lend credibility to the IDA program, Metcalf says.

The UETHDA has created a win win relationship with their banking partners. “My perspective on banks wasn’t so great before this,” Metcalf says. But not only have the banks learned that IDAs are good business, “for the most part, banks really want to help these people,” she says.

This article originally ran in the IDAresources.org Update Newsletter on 01/07/10 and is available for archival purposes.
For updated information on asset building and the AFI program, please see www.IDAresources.org.