When we hear the words radical and banking used together, many of us think first about the latest and greatest flashy technology. Applying for accounts online, depositing checks remotely, and doing business with online-only banks are examples that come to mind. But as an article in this month’s issue of Yes! Magazine points out, radical banking doesn’t necessarily need to be flashy or involve technology.
The article – Small Banks, Radical Vision, talks about William Spademan, who is referred to as a ‘radical banker’, and his efforts to create a new banking model he calls a Common Good Bank.
“For six years, he has been working to develop a new type of financial institution he calls a Common Good Bank. Spademan’s bank combines two common financial structures – a credit union and a public bank corporation – directing the community focus of the former and the profit potential of the latter toward the good of society. It’s an ambitious idea that would give communities democratic control over the creation of money and its distribution – restoring public accountability in the financial system, and funding important public projects that have been ignored by Wall Street financiers.”
The idea of a bank borrowing organizing principles from credit unions, where customers/members take ownership in the organization, is certainly a departure from what we’re used to seeing from for-profit financial institutions.
The article goes on to discuss this aspect of the Common Good Bank model:
“They would be stock-based corporations, but with strict rules that require them to be governed like a credit union. What’s more, Common Good Banks could turn a profit, but they would have to spend it on charitable contributions. Owners of the bank would vote on how to distribute profits to various charities, nominated by the owners themselves.”
Amidst all the back and forth between banks and credit unions, the Common Good Bank looks to be establishing a position for itself midway between – blurring the lines between bank and credit union, and doing so willingly.
While Common Good Bank has yet to officially launch, Spademan has seemingly found a solid point of differentiation around which to organize this new effort. Recent shifts in the economy have brought on new challenges. These challenges have also introduced new opportunities. While some financial institutions will continue to conduct business as usual, I think most of us would agree that consumers are looking for new solutions to new challenges – many of these new challenges simply can not be met with old models, old products, or old solutions.
Appropriately, the magazine article appears in the section: The New Economy.
According to Common Good Finance’s website, A Common Good Bank is “not just another bank with a social mission. This is a social mission with a bank!” It goes on to list important characteristics of the bank:
- All profits go to schools and other nonprofits
- Depositors decide what the bank should invest in
- Free local credit card processing for local businesses
- Micr0-loans for new businesses and community projects
- A full-range of secure, FDIC-insured banking services
- Committed to sustainability and economic justice
Additionally, it looks like the bank is looking to establish Common Good Banks in communities around the country with the help of partners and investors.
In today’s marketplace, where consumer uncertainty is high and national banks are continually receiving negative publicity, Common Good Bank’s emphasis on a social mission – rather than the overused ‘commitment to the community’ – may allow the bank to make meaningful connections with its customers, and have a real and meaningful impact on the communities it serves.
We’ll stay tuned and see if Common Good Bank lives up to the subtitle of the Yes! Magazine article: Local banks can change the world, one neighborly investment at a time.
