Financial Empowerment in the Summer: An Interview with I-Hsing Sun

I recently conducted the following interview with I-Hsing Sun, Chief Program Officer, Cities for Financial Empowerment (CFE) Fund. The interview has been edited lightly. Photos of programs supported by the CFE Fund are throughout this issue of YouthNotes.

At the Cities for Financial Empowerment Fund (CFE Fund), you have a lot of different projects going on, which are generally focused on partner cities. What pieces of your work most impact youth?
The CFE Fund works with mayors and their teams, providing both funding and technical assistance, to help cities integrate financial programs into municipal social service programs to financially empower residents. We work in over 40 cities across the country (as well as some projects internationally!), and our youth-focused work has been centered on our Summer Jobs Connect (SJC) initiative, now in eight cities. SJC takes the large-scale infrastructure of summer youth employment programs (SYEPs) serving 14-24 year olds and adds financial education and banking access, to help empower young people to not just earn money, but to manage it wisely and make the most of their summer paychecks.

Through your Summer Jobs Connect effort, you’re adding financial empowerment to summer youth employment programs, including connections to banking products.
What are some lessons for our members about what to look for in financial products for young people?

Youth are different from adults, and financial products for young people should be carefully chosen. Many programs looked for “non-custodial” accounts that did not require an adult to co-sign or guarantee the account, so that youth were in full control of their paychecks and thus had a voice in how the funds would be used, even if it was ultimately allocated towards family expenses. Identification was another important issue; programs often worked with their bank and credit union partners to tweak processes so that alternate forms of ID were accepted, including municipal IDs, school IDs, or a letter verifying SYEP participation. Due to the temporary nature of the employment program, it was also important that the accounts were truly free accounts with no high fees. Other critical features included no required starting balance (the deposit requirement was suspended until the first paycheck) and online or remote account opening.

What kinds of financial institutions are likely to be most receptive to working with youth? Credit unions? What kind of assurances may these institutions need to work with populations with no or poor credit records?
SJC cities built strong partnerships with both banks and credit unions—the best partners are the ones who are invested in the community, who “get it” and are excited to work with cities and nonprofits to help young people get banked! This does require a good deal of relationship-building, including working with bank staff to help them understand the program’s goals. The employment program partners usually start by reaching out to the local financial institution—commonly the Community Reinvestment Act (CRA) officer, or alternatively a branch manager. When negotiating for the best account for SYEP participants, the program looks to the SJC Youth account standards for guidance (featured in Appendix A of this report). Ultimately, many financial institution partners now work with program staff to tweak processes (like allowing for remote account opening) or products (like accepting alternate forms of ID). Many financial partners are also willing to overlook poor banking or credit history, recognizing that these issues may have been caused by an adult who used the young person’s identification.

What are some key takeaways for engaging disconnected youth, who may depend on cell phones for access to bank accounts, may be far from brick-and-mortar banks, and may not have a family history of positive interactions with traditional financial institutions?
Some early focus group research we did with SJC participants showed that household banking status, age, and parental/family guidance all influenced the way youth thought about banks and credit unions. Based on these findings, there are a number of ways programs can respond:

Sharing financial empowerment messages with parents and guardians, and engaging them as financial empowerment champions;
Emphasizing different messages depending on youth age (for example, messages about the importance and benefits of financial institutions may be appropriate for younger youth, while older youth may be more responsive to messages about how, not why, to open and maintain accounts); and
Asking youth who have accounts to serve as peer educators to unbanked youth, especially those from unbanked households.
Just this past summer, we implemented a survey to inform banking access initiatives for low- and moderate-income (LMI) youth by examining the perceptions of, behaviors around, barriers to and intentions towards the utilization of mainstream financial products and services by LMI SYEP participants in SJC cities. We hope to release a report on the survey’s findings in early 2017.

How can NYEC members most effectively advocate for disconnected youth to financial institutions? What is your message to financial institutions about why working with disconnected youth makes business sense?
Again, the most important piece of working with financial institutions is relationship-building. Helping branch staff, as well as senior financial institution leadership, understand the goals of the program is key. Our financial institution partners are not looking for short-term profit on these accounts now—rather, they are focusing on supporting young people now and providing them positive financial experiences, thus leading to long-term customer relationships. Some of our banking partners that have been working with young people for years have told us that over time, the young people are coming back to their credit union when they have other financial needs, such as credit cards, school loans, or car loans. For instance, South Florida Educational Federal Credit Union has been providing non-custodial accounts to young people in Miami for ten years, even before its partnership with the Miami Summer Youth Empowerment and Employment Program. As such, they have longitudinal data which shows that since they started opening youth accounts, their 6,400 youth accounts have over $6 million in deposits and almost $3 million in loan balances. Building this trusted relationship early on in a young person’s financial life is key to a sustained, long-term relationship.

As your name suggests, cities are a big focus of your work. What is it about cities that make them a good focal point for financial-empowerment work? What are some lessons that all NYEC members – whether staff of workforce investment boards or city agencies, leaders of nonprofit providers, or researchers – should know about dealing with mayors, city councils, other elected city officials, or city agencies?
Local governments are close enough to residents to understand the challenges that affect them, and powerful enough to deploy resources to implement large-scale, innovative and effective solutions (like SJC!) that help those in need. Cities are also great conveners, able to bring together city agencies, nonprofits, academics, financial institutions and other private sector stakeholders for innovative partnerships. When dealing with mayors and other city leaders, NYEC members should remember that cities have many connection points with residents—through providing them payments like summer youth employment salaries; through connecting them to services like workforce development; and through communications channels like public access TV or 311. Partnering with cities, through public-private partnerships, is a great way to reach residents (and do so at scale!) through these trusted channels.