For financial institutions (FIs) of all sizes, maintaining a local presence and doing good work can have positive ripple effects.
John Owens, president of Elan Credit Card, told PYMNTS that FIs’ visibility and active participation in the communities where they operate can influence where customers opt to obtain or retain their primary banking relationship. In addition, this dynamic is especially true with younger demographic segments.
“In general, customers like where they live, want to support their communities, and demonstrate that financially by shopping locally and by investing in local charities,” he said.
He noted that by visibly investing and participating in their communities, FIs can show customers that they share their same values, which can be a deciding factor in where they elect to start or continue their primary financial relationships.
Joint research done by PYMNTS and Elan Credit Card (a U.S. Bank division) showed that 93% of consumers who say their FIs are generous with charitable contributions are also very or extremely satisfied with those same FIs.
In addition, 43% of consumers’ charitable donations are given to groups within their local communities. The data also found that the stronger a consumer’s support for charities, the greater their patronage of local merchants and restaurants.
Diving a bit deeper into the research, younger generations — millennials and bridge millennials — are especially predisposed to put their money where their social consciences are. They volunteer, on average, more than a dozen times a year.
In PYMNTS/Elan’s findings, by way of example, 43% of bridge millennials would move their accounts to an FI that made charitable donations.
Owens noted that the study suggested younger demographics and high spenders — both critical segments for FIs — are most likely to align with FIs that they believe are supportive of their local communities. As such, in addition to strengthening the communities in which they operate, charitable activity can also be a competitive advantage.
Action Is Key
Having visible involvement and support of local communities can take many forms. Elan, which supports over 1,300 banks and credit unions, recently opted to provide 50 credit union partners with $12,500 each to give to their communities as they see fit. Community beneficiaries have included food banks, free school supply programs and financial literacy efforts, just to name a few.
These FI partners are deeply involved in their communities and know best how to make a difference. They are visibly active in the communities they serve and are well positioned to continue to attract and retain customers.