A bank that actually helps people? Jan Edwards on revolutionising banking to be genuinely community-first

14 September 2016

Alliance Bank® member and BDCU Ltd. CEO Jan Edwards chats ethical investment, social enterprise modelling and why her organisation grants 15 cents for every dollar of interest earned against deposits in a community savings account.

 

For many Australians, the word ‘bank’ doesn’t conjure a particularly positive image. Skepticism around the practice, ethics and customer service of financial institutions is something of a national sport. (And if the Opposition’s call for a Royal Commission into misconduct in the banking sector goes ahead, the government will be closely watching, too.) So the idea of a bank doing good or, better still, existing to do good for its community is unusual, to say the least.

 

For Jan Edwards, this community-first banking approach isn’t a pipe dream or clever marketing spin, it’s at the centre of her business. Edwards is the CEO of BDCU Ltd. – a 100% member-owned mutual based in New South Wales’ Southern Highlands. Together with three other like-minded organisations, they have formed an alliance with Bendigo and Adelaide Bank to form the Alliance Bank®. Unlike the so-called “Big Four”, the Alliance Bank® model is built around a commitment to members – who are recognised as both customers and owners – and to social investment in the community.

 

“It started out seven years ago with a group of mutual financial institutions,” says Edwards on the origins of Alliance Bank®. “All of us were credit unions who had a degree of frustration around having capital and not being able to use it to fulfil the promise credit unions started with –  to help people.”

 

“We thought, ‘There must be a better way’” remembers Edwards. “So we began working on how we could continue to provide financial services for the members who know and love us, and anyone else interested in our value proposition, but also free up our capital and ability to invest back in our members and community.”

 

That freeing up of capital came through partnering with Bendigo and Adelaide Bank, a financial entity that was selected not for its capital strength, but its value system and ethical approach. In setting up this new union, the alliance took on a social enterprise approach to banking.

 

If you’re wondering what kind of social initiatives the Alliance Bank® supports, naturally, these vary from region to region. “Because none of us are a national organisation, we can focus on our own communities and look at what’s needed,” Edwards points out.

 

At BDCU Alliance Bank®, local investment means building community support, creating a corporate volunteering program, and enabling local businesses to deliver services to those in need. Specifically though, their newest initiative sees local organisations, such as schools and community projects encouraging their networks to start a community account with BDCU Alliance Bank®.

 

For example, Edwards says, “a school would go out to parents and say, ‘If you deposit with BDCU Alliance Bank® in this community account you’ll get a good interest rate and be doing good for the school. The parent earns a good interest rate and the school receives a grant of 15cents from BDCU’s capital for every dollar of interest earned to use on its own projects. If the schools opens its own community account they too receive a grant of 15cents for every dollar of interest they earn’.”

 

This program rolled out a few months ago in the Southern Highlands and Southern Tablelands and it’s already resonating with the community.

 

In her role, Edwards also recognised the need for community support in assisting the region’s young workforce.

 

“One of the problems in our area is that a fair proportion of young people want to stay here, but getting the wherewithal to find and hold an apprenticeship is stopping them, so they go off to other areas. Our effort is to keep them in the area, give a leg up and help them start on their career.”

 

To do so, they hope to soon offer apprentices an interest-free loan up to $5,000 to pay for their tools of the trade. That might mean knives for a budding chef in the hospitality industry or specific tools for a bricklayer. The apprentices also receive mentoring on budgeting and starting their own businesses as well as planned discounts from local suppliers that provide the tools of trade.

 

“We look at what apprentices earn and tailor the payments to something they can sustain while getting through apprenticeship,” says Edwards. “If factors change or they lose their job, there’s a built in mechanism that would allow us to look at how we can give them a payment holiday or change while they’re finding a new role.”

 

In a period where our federal Opposition party is calling for a Royal Commission into misconduct in the banking and financial services industry, it’s normal to feel skeptical about the money sector.

 

Fortunately, thanks to Alliance Bank®, there is a better way.

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