Bank On Music City — an initiative to help those Nashvillians with modest banking history establish conventional banking relationships — launched Tuesday with Mayor Karl Dean and officials with the Federal Reserve Bank, the United Way of Metropolitan Nashville and area banks gathering at the Sam Levy Homes in East Nashville.
The goal of the program is to help working families gain financial stability by building a credit history and gaining access to low-cost sources of credit. Through Bank On Music City (a partnership of local banks, credit unions, and government and community organizations), individuals who are not currently utilizing a financial institution can connect with mainstream financial services and customized products including affordable checking, savings and credit.
As part of the launching, on Tuesday and through its Volunteer Income Tax Assistance program, the United Way hosted at Sam Levy Homes a free tax preparation for low- to moderate-income households.
“I think it went very well,” Luis Parodi, Fifth Third Bank’s Nashville-based manager of the Community Reinvestment Act, said regarding the first day’s effort.
Parodi (pictured here) said similar programs with which Fifth Third has been involved have worked well in other cities, including Indianapolis and Cincinnati.
“We are not reinventing the wheel,” he said.
The eight other banks that are charter members of Bank On Music City are Citizens Bank, First Tennessee, Old Hickory Credit Union, Pinnacle Financial Partners, Regions, Reliant Bank, SunTrust Bank and the Tennessee Credit Union.
Bank On Music City educates first-time and occasional bank users on how to become financially stable and avoid the pitfalls of predatory financial service alternatives. Participating banks will offer checking and savings accounts with low or no monthly fees and monthly balances, even for individuals who may have mishandled previous accounts. In those cases, completion of financial education courses may first be required by the financial institution.
Mike Hodges, president and CEO of Advance Financial (an alternative financial services company), said that, on whole, Bank on Music City is a “ great initiative.”
“We conduct 200,000 transactions per month in greater Nashville area, so we are already serving lots of people who will use Bank on Music City,” Hodges said. “We are reaching out to see how we can be of help to the program.”
Hodges said he has some reservations regarding the program, as it will have the government involved with individuals choosing their financial institutions.
“But overall, we are in support of helping folks achieve upward mobility with their financial services,” he said.
United Way of Metropolitan Nashville will oversee the program, a recommendation of the Economic Opportunity Workgroup of Dean’s Poverty Reduction Initiative. Helping unbanked and under-banked Nashvillians establish banking relationships is a priority of the group in advance of new federal regulations that will require recipients of Social Security and other government payments to use direct deposit by April 2013.
“The underlying objective of Bank On Music City is to help hard-working Nashvillians keep more of what they earn by making informed financial decisions,” Dean said in a release. “When more families become financially stable, it benefits the entire community.”
The Economic Opportunity Workgroup, which studied the problem extensively over the past three years, concluded that a healthy mainstream banking relationship is the first and most crucial step toward financial stability. This foundational banking relationship opens doors for individuals to pursue higher education and valuable job skills, homeownership and entrepreneurship.
“This is an exciting solution to address one of our community’s most debilitating family problems: financial instability,” Margaret Dolan, vice president of community relations at Ingram Industries Inc., and board chair of the United Way of Metropolitan Nashville, said in a release.
Organizations that will assist in the financial education process include Catholic Charities, Christian Community Services, Inc., Conexión Américas, Metropolitan Nashville Public Schools’ Community Career Center, New Level CDC, Residential Resources, Tennessee Department of Financial Institutions, United Way’s Martha O’Bryan Family Resource Center Center and University of Tennessee Extension.
Other partners include Apprisen Financial Services, Belmont University, Gap Community, Metro Social Services, Nashville Alliance for Financial Independence, Nashville Council on Aging, Nashville Mayor’s Office and Nurses for Newborns.