On April 16 Kat Taylor, Co-Founder and Co-CEO of Beneficial State Bank, shared her experience and vision as a leader of the social enterprise bank. Beneficial State’s mission is simple – that banking can once again be about people interacting with people for the sake of economic growth and opportunity, in a healthy way. Under her leadership, Beneficial State is trying to move banking back to main street, for the benefit of all. Some highlights from her comments:
- The borrowers and depositors are the “heroes” – banks are matchmakers who must treat them with respect. However, many Wall Street banks, with their high finance charges, are only interested in maximizing their private shareholder value. Beneficial State pursues models in which consumer surplus is returned to the consumers. This discourages consumers from turning to payday lenders and allows consumers the time and resiliency to become stable, mainstream participants in community activities.
- Lend money to constructive activities. This simple concept is very hard. A key early “fail up” experience was that investing profits from commercial lending into the foundation for grantmaking would not work. Instead the bank chose to keep the money and create incentives for borrowers to do good things they otherwise wouldn’t be paid for. This is a sort of social impact bond based on a traditional banking model. The result benefits all parties and enables a positive social impact.
- In addition to regulations and guidelines, there needs to be market alternatives to payday lending. There is a lot of illegal payday lending that lives online or offshore, so simply enforcing the rules around payday lending will not solve the problem. To encourage fair and transparent banking services, Beneficial State supports pre-prime consumer lending, an alternative to payday lending that allows the 62% of Millenials without a credit card to build a credit score.