I recently happened to find myself among a group of young professionals who had grown up in the same rural area of Georgia, but had dispersed to not only different parts of the state, but also different parts of the country and even at times, the world. At some point in the evening, it became the topic of conversation that one of the members of this group still banked at his hometown community bank despite no longer living there and spending almost a decade traveling the world. His childhood friends were shocked, uttering things like “Wait, you still bank there?” and “Isn’t it time you leave the nest?”
As someone who did not grow up in Georgia and thus was an outsider to the conversation, I really began to think about this. Why should you have to leave the bank you’ve grown up with and trusted for years just because you have left the proverbial nest?
Admittedly, when I left for college, it was before the advent of mobile banking and federal preemption of interstate branching restrictions. When I moved out of state I was forced to switch banks so that I could actually deposit checks and bank efficiently. However, legislative changes, combined with drastic changes in technology, have eliminated the necessity for young adults to switch banks when they move away from home.
Granted, creating meaningful relationships with the youth in your community may not increase your deposits immediately. Lets face it, teenagers are not known for having large bank balances. However, it is no longer a foregone conclusion that they will flee their bank’s nest when they leave their parents’ nest. Hopefully, one day, their bank account will be large enough to support more than pizza and a movie.
A proposal to the Georgia General Assembly may even make creating and maintaining these relationships easier. The Georgia Department of Banking and Finance’s “Housekeeping Bill” (HB 143) proposes, among other things, revisions to the existing Georgia Code section regarding deposits by minors. In addition to stating that a state bank can accept deposits from a person sixteen years of age and older without the consent of a parent or guardian, the bill also specifically addresses current issues by affirmatively allowing banks to provide minors who are at least sixteen with electronic access to their funds through smart phone apps or other electronic means. This clarification is not insignificant when you consider how much time teenagers tend to spend on their smart phones. If a person has been banking at your bank via their smart phone since they were sixteen, they are significantly less likely to feel compelled to start banking somewhere else when they go off to college or otherwise leave the community.
The U.S. Census Bureau has reported that minors account for almost a quarter of the population in Georgia. It is not too early to start capturing this market share. While HB 143 requires parental consent for accepting deposits from minors under sixteen, do not let this deter you from providing banking services catering to minors under sixteen. Each bank should carefully evaluate potential risks in offering account services to minors, but we think the product offering can present significant opportunities for creating lifelong bank customers. Providing youth banking programs may not only allow you to start creating client relationships at an early age, but may also qualify as a community development service for purposes of the Community Reinvestment Act.
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