Page 87 - Pay Magazine s2014

volume 7 • spring 2014
We’ve addressed the concerns raised in the order and imple- mented programs to effectively accommodate those concerns, including developing an effective framework to support our partners’ businesses and deliver valued products to consumers.
The MetaBank board has committed tens of millions of dollars to this effort, which is the kind of invest- ment that’s necessary if you’re a bank planning to participate in this industry. And, we recognize the scale and volume that’s required for a bank to get a fair return on that size investment.
We’re committed.
Paybefore: You brought up the consent order, so let’s get it out of the way.
BH: From fall 2010 until Aug. 7, 2014, we weren’t able to add new program managers outside of our existing relationships or introduce new products and services without written non-objection from our regulator. It was like doing business with one arm tied behind our back. It was a difficult and frustrating time, but it gave us the opportunity to look at our platform and processes and make necessary changes that give us a really good foundation going forward. It was painful, but we’re better for it because now,
I believe, we have one of the strongest, most robust platforms— if not the strongest and most robust—in the industry to build from going forward.
I’m also really proud of my team, our business partners and our board. Their cooperation, hard work and continual support made it possible for us to persevere through some very challenging times. I’m sure there were some who thought we wouldn’t make it. The fact that we’re still here speaks to the char- acter of the great people I get to work with.
Paybefore: MetaBank’s vision is financial inclusion for everyone. How do you approach that?
BH: Our approach is to focus on the consumers that many other banks overlook. It’s hard for most banks to get excited about con- sumer accounts that carry an average balance of only $100 or so, especially when those accounts bring so much potential regulatory and reputational risk with them.
Prepaid is a great starting point but not the final solution nor the only solution. For me, prepaid is more about the distribution channel than the product itself. And, prepaid is
a great solution because it’s often more flexible and convenient than
a traditional bank account. But, even though there’s a broad range of applications for prepaid, it’s a linear product that is single threaded through the consumer’s financial landscape: money on, money off.
Financial inclusion requires a range of products to address the breadth of consumers’ financial needs to help them gain financial dignity. Underserved consumers need a
depository type of account—pre- paid or otherwise. They need a fully functioning account that includes the features a bank account typi- cally does, like bill pay and mobile deposit. They also need savings— and incentives that motivate them to save—and they need credit.
Paybefore: Credit? Isn’t credit pretty much a dirty word when talking about financial services for the underserved?
BH: Credit isn’t a dirty word. Access to credit facilitates the growth of a community and in- creases the standard of living for everyone. There are legitimate uses of credit, and there are those better left unused. People need credit to buy homes and start businesses. And, sometimes, they even need credit when they’re in a pinch.
Banks can play an important role
in offering responsible credit to the underserved. We can’t be dissuaded or acquiesce to critics who say differently. When consumers have
a legitimate need for credit and can afford to pay it back, we should be there to provide it for them, regard- less of what demographic or financial status they belong to.
Just like prepaid or any other bank product, however, extending credit has to be profitable for the bank and the bank has to be able to manage risk effectively. If you don’t make a profit, you won’t have investors to provide capital for the bank, and you might submit yourself to other kinds of regulatory scrutiny
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