Posts tagged Blog
The power of different banks in different cities
 
 

There are several ways to assess power, and most of them boil down to who’s got the most money, and/or who’s got the most people supporting them (who collectively have money).

Banks have power to the degree people put their money in them.

Banks have power to the degree people put their money in them.

Banks publicly report how much money people deposit in their bank (in the form of checking, savings, CDs, and money market accounts), and how many accounts they have.

So let’s take a look at the banks in each of four metropolitan areas -- the Chicago metro, the New York City metro, the San Francisco metro, and the Washington DC metro -- and the sum of money people choose to deposit with them.

There’s a lot of money in deposit accounts in New York City bank branches.

Bank branches in the New York City metropolitan area have more money in deposit accounts than in all of the bank branches in the Chicago, San Francisco, and the Washington DC metro areas combined.

The New York City metro area has 201 banks -- about 10 banks for every 100,000 residents -- with $1.8 trillion put in deposit accounts within NYC area branches. This is $89,000 in bank deposits, per capita.

Number of banks in each metro, and the amount of money ($ billions) in bank deposits in all the branches within the metro. Banks in metro area defined as banks with an office or branch in area. Source: FDIC Deposit Market Share Report, June 2018. Deposit dollars data source: FDIC Summary of Deposits Survey, June 2018.

The next closest city with the most banks and money in them is Chicago. There are 189 different banks in the Chicago metro area. This is 20 banks or so for every 100,000 residents, more banks per capita than the other cities on our list. People collectively hold $398 billion in checking, savings, CD and money market accounts within Chicago area bank branches. This is about $42,000 for every Chicago resident.

Chicago has more banks per capita.

Number of banks in each metro area for every 100,000 residents, and money on deposit in all banks in the area, per capita. Bank location source: FDIC Deposit Market Share Report, June 2018. Deposit dollars data source: FDIC Summary of Deposits Survey, 2018.

San Francisco bank branches have more money in their deposit accounts per capita than those in Chicago or DC. People living in the San Francisco metro area have about 15 banks per 100,000 people, or 69 total banks. There is about $79,000 in checking, savings, CD, and money market accounts in bank branches in the San Francisco area, per capita.

In the Washington DC metro area, 77 banks -- about 13 for every 100,000 residents -- held $256 billion on deposit in bank branches: about $41,000 per capita.

Money in deposit accounts can come from people and organizations near and far.

The money in any given city’s network of banks can come from people and businesses located across the country, and not just from those residing in the city.   

For example, let’s say you live in Seattle. If you bank with a bank solely located in Chicago, your money is in Chicago. If you bank with a national bank, your money may be wherever in the country the bank has an office and chooses to put your money, whether that be Seattle or New York City or Sioux Falls, South Dakota. If you bank with an online bank, chances are the online part of the business is a digital storefront to a brick-and-mortar bank that manages the deposit part of the business, and your money’s at work in the place(s) where that bank works.

The geographic location of a bank’s deposits is important, because banks generally finance communities proportionate to where they have branches and the amount of deposits in them. (There’s a law called the Community Reinvestment Act that encourages banks to do just this.)

So take a look at where a bank concentrates its deposits to have some context about where and how a bank is focusing its financing.

(Pro tip: If you want your money to support a particular community, browse banks that have their deposits concentrated there.)

For example: Southern Bancorp accepts deposits from across the country. Because banks generally finance communities proportionate to where they have branches and the amount of deposits in them, Southern focuses the majority of its community financing in the Mississippi Delta.

Map shows where deposits with Southern Bancorp are at work, by county. Data source: FDIC Summary of Deposits Survey, 2018.

A few banks dominate in major metropolitan markets.

Of all of the money that lands in deposit accounts in Chicago, 22% is deposited with JP Morgan Chase. That’s a sizeable amount of money from people and businesses in a city controlled by a single bank.  

But not as much as New York City, where Chase also controls more money than any other bank in the metro, with 32% of deposits, locally.

In San Francisco, it’s a similar story to New York, but this time, headlined by a different bank: Bank of America controls 32% of money on deposit in San Francisco bank branches.

In the Washington DC metro, E*TRADE Bank controls 17% of deposits.

Among 200 or so banks in each the Chicago and New York City metropolitan areas, JP Morgan Chase has in its Chicago and New York City area branches nearly a fourth and a third, respectively, of all the money in deposit accounts in all of the bank branches in those cities. Bank of America has in its San Francisco area branches a third of all the money in deposit accounts in San Francisco area branches. E-Trade Bank has 17% of all of the money in deposit accounts in the Washington DC area.

The share of total deposits in a metro area held by the bank with the most deposits in its branches. Source: FDIC Deposit Market Share Report, June 2018

Millions of accounts are kept with local banks, the most populous type of bank.

Despite the dominance of the expected market players -- national banks -- in major cities, local banks are meaningful contenders for deposit dollars. (For the purpose of this blog, we’ll define local banks as those that are 100% located within the metro area.)

About 1.9 million accounts are with local banks in the Chicago area. In the New York City area, about 2.6 million accounts are with local banks. There are more than half a million accounts with local banks in the San Francisco area, and over 800,000 with local banks in the DC area.

Number of deposit accounts in local banks (millions). Source: FDIC Deposit Market Share Report, June 2018

Local banks have a larger market share in Chicago and DC areas than they do in NYC and San Francisco areas. Still, they collectively control billions of dollars in each market.

Local banks in the Chicago area control 18% of the money in checking, savings, CD and money market accounts in all bank branches across the Chicago metro area.  

In the New York City area, local banks control 9% of total deposits in the area.

In the San Francisco area, local banks control 4% of total area deposits.

And in DC, local banks are entrusted with a larger share of deposit dollars than local banks in other cities on our list, with 24% of all deposit dollars .

If these numbers seem modest, remember the amount of dollars on the table: 9% of the $1.8 trillion in deposit accounts in the New York City area is $162 billion; 4% of the $371 billion in deposit accounts in the San Francisco area is is nearly $15 billion.

The percentage of total deposits ($) within a city placed in local banks. Data source: FDIC Sumaary of Deposits Survey, 2018.


A bank no longer needs to have a lot of branches to have a lot of deposits.

Taking a look at the ten banks with the most deposits in each metro area, you’ll see that a bank need not have many branches to have a leading share of local deposits.

Bank branches, no doubt, may have mattered in helping a bank become popular in the past. Back in the day, when you had to walk into a branch to do your banking, a bank with a lot of branches was able to attract a large customer base. Today, having a lot of branches in key locations across a city is great advertising, above all else. (Bank branches are an expensive sort of billboard for banks. We say billboard, because many people don’t really walk into bank branches anymore. Rather than cash machines, bank branches are more like the Apple Store, or the Nike store, or any other store that still has a storefront. The storefront helps you remember it’s there. With lots of local locations, a bank might lead you to think it’s locally focused. Though as outlined above, a better indicator of local focus is not the number of branches a bank has, but where the bank concentrates its deposits.)

When finding a bank these days, what's relevant to look at is not necessarily how many branches it has, but whether the bank offers a value proposition that matters to you (like financing Native American equity, or small business in Chicago, or small farms in the Mississippi Delta, or sustainability) and the technology to make banking from anywhere possible (like online account opening and mobile deposits).  

In Chicago and New York, about 50% of the bank branches you bump into are likely to be owned by one of the ten most popular banks. In San Francisco and Washington DC, there’s closer to a 70% chance that any given bank branch you see belongs to one of the ten most popular banks in those cities. This is great advertising. No wonder these banks are top of mind.

Looking for banks online versus on any given street would likely result in a different set of banks making up the most popular banks in a city for people’s deposits.

Where do you bank, and why?

What banks do you support, and why? What’s your money up to?


Mighty helps you find the best banks for your money and values. Browse banks now.

*Deposit data from June 30th, 2018

 
 
BlogTeam MightyBlog
How many banks are in the US? The average person doesn't have a clue.
 

9 out of every 10 people made the same error.

How many banking options do you have? Most people’s assumptions are off the mark.

How many banking options do you have? Most people’s assumptions are off the mark.

How many banks are there in the US?

We invited random people on the street to write down guesses on a piece of paper.  The answers we got were predictably varied, with guesses ranging from 10 to 50,079,000,600. Spoiler: the answer is somewhere in between.

In summary, the average person who thinks they’d have a realistic idea has no idea how many banks there are. And why should they, you might think?

Well we happened to conduct this exercise on the streets of the University of Chicago campus, where the probability that a passerby is coming from or heading into a conversation about some combination of economics, banks, capitalization ratios and market competition is high. So the average passerby would be likely to at least think she has a clue, and she’d enjoy the opportunity to make an educated guess.

To put it another way, our question is like asking a New Yorker how many food carts there are in Manhattan. It’s a question for which many would assume they could at least make a decent guess somewhere in the ballpark, and more likely than not enjoy doing so.  

Because you’re reading our blog -- a banking blog -- we assume you’re in the category of someone who thinks they have a clue.

So let’s see if you’re more informed than the average person.

Up for playing along? Stop scrolling now and guess the number of banks.




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Really, take a guess.

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Somewhere between 10 and 50,079,000,600.

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Got your number?

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Someone playing along, making an educated guess.

Someone playing along, making an educated guess.


There are currently 5,477 banks in the US.* If you’re like most people we talked to, your guess was far too low.

Regardless of whether our participants wrote down their gut reaction or treated this like a market-sizing consulting interview question (yes, that happened), the vast majority of people underestimated the number of banks in the US.

On this poster alone, 30 of the 35 guesses were too low. That means nearly 9 out of every 10 people we talked to thought there were fewer banks than there actually are.

But here’s what really caught us off guard: 74% of people we talked with guessed a number that was less than half the true count.

This means that 3 in every 4 people we talked with were surprised to learn there are more than double the number of banks than they thought there were.

Perhaps this can be explained by a trend that’s fairly well-known: the consolidation of the banking industry. In a globalizing world, big business (or in this case, big banks) buy smaller businesses (or banks).

But despite this consolidation, the number of banks available for the average person is on the rise. How so?

Well, banks today can better compete, irrespective of size, thanks to technology. A majority of banks offer online banking, a growing number offer mobile banking, and more and more are incorporating other technologies for their customers’ convenience, like letting new customers transfer their direct deposits and bill pay from their old bank to their new bank with one click. This means that more people can use more banks than ever before, no matter where they’re located, with little need (if ever) to visit the bank in person.

So yeah. If you use a bank, know there are more than 5,000 others, among which there might be a few that you’d really dig. Banks located in more locations than you may have considered were even open to you.

Just like the lunch you just ate today was perhaps made with ingredients produced near and far, you can consider banks today both near and far, too.

Are you banking with the best bank for your money and values?

Search banks now 


*Data from FDIC, Q3 2018. Non-depository, non-insured financial institutions excluded from this number.


 
 
The important thing you might have overlooked doing since the last election
 

Guest post by Bridget Newsham

Bridget Newsham is an editor and writer based out of Chicago, Illinois. She writes primarily about local politics, housing, and urban development but is always excited to take on new and interesting subjects. Her work has been featured in Chicago Magazine, VICE, South Side Weekly, among others.

Your money in your bank is used to finance what you believe in, or undermine your interests. Choose a bank that shares your values.

Image credit: mighty Mighty intern Lauren Han

Image credit: mighty Mighty intern Lauren Han

Regardless of what side of the political aisle you are on these days, I think we can all agree things feel a little out of our control. Times are tough out there. We know you’ve been busy protesting, having tough political conversations with your uncle at the holiday dinner table, and taking other important steps to impact change in our world—that’s awesome! But I am here today to make sure you take one quick final step (it’ll take less than 10 minutes, muuuuch quicker than that 2-hour protest you went to last week) to ensure you make the biggest impact with the least amount of effort: changing your bank account.

My bank account you say? Yep, you read that right. Although the other civic actions you’ve been taking are critical to making change, let’s be honest here: money makes the world go round, and banks are funding a whole array of causes that you might not agree with. We wouldn’t want the other hard work you’re doing to be wasted because your money is being used to undermine the very issues you’re fighting for.

This idea isn’t new. And it’s actually become trendy. Calling out banks for where and what they invest in has hit the celebrity circuit. Sarah Silverman called out her bank for supporting the Dakota Access Pipeline and then plucked her money right out of that bank and put it into a community-focused credit union that aligned with her values. In response to the police killings of young black men in 2016, Killer Mike of Run the Jewels urged people to put their money in black-owned banks, and 8,000 people did.

The cool thing about all of this is that if you’ve got a few dollars in a bank, you can vote with that money, and bank without sacrificing anything. As a matter of fact, there are community-investing banks across the country, and with these banks, there’s a good chance you’ll get a better rate and lower fees.

Chicago native, tech entrepreneur and former banker Daniel Ramirez-Raftree recently moved to New York but decided to keep a portion of his money in a local Chicago bank because he knew his money would be used for good. “If you’re a civic-minded person concerned about social impact,” Ramirez-Rafttree said, “I can tell you you’re much more likely to agree with what community banks are doing with your money than what almost any other bank is doing with it.”

Eliot Abrams is a University of Chicago alumni who worked with fellow classmates to transfer one-million dollars of the University’s money to four community-focused banks. “Through some research, we realized the university had a ton of cash on hand at all times,” said Abrams. “So we thought there was no reason not to keep this money in a community-focused bank.” And the university agreed. The only restriction was that the money needed to be insured by the FDIC, but good news! The majority of banks in the country are FDIC-insured. Your deposits in all FDIC-insured banks are equally safe up to at least $250,000. And many banks offer multimillion-dollar deposit insurance.

The beauty of choosing among community-focused banks is that each is a little bit different. Some invest in Black-owned businesses, some invest in rural communities, others have a strong interest in the environment. Some do all of the above. Many have an explicit purpose beyond growing richer.

Embedded in communities, community-focused banks create flexible loan options, provide higher interest rates, and many being small businesses themselves, are well-suited to work with other small businesses. Though they may not have thousands of branches nationwide, most have online banking or mobile apps, and local market expertise. Abrams summarizes: “community-focused banks tend to have more flexibility in terms of what they can offer.”

By now you must be asking yourself, huh—maybe it’s time to consider voting with my bank dollars in addition to my ballot and my megaphone?

 
BlogBridget NewshamBlog
Four myths about opening a bank account
 

You may be holding onto some old ideas about what banking is and isn’t.

 
Fear is a bad advisor.

Fear is a bad advisor.

 
 

We know it’s been a while since some of you have opened up a bank account. Maybe you’ve only done it once or twice in your lifetime.

Just like anything you do infrequently, the thought of opening up a new bank account might make you feel a bit anxious.

We’ve written down four myths you may have and then unpack them.

Myth #1: I have to visit a bank in person to open a checking, savings or CD account.

Truth: You can open up an account from your living room couch.

If visiting a bank branch sounds like the last thing you’d ever want to do, good news: hundreds of banks offer online account opening. So you can open your account in between ordering take-out and shopping for shoes.

For banks that don’t yet offer online account opening, many let you open up an account over the phone.

Myth #2: It takes eons to open up a bank account.

Truth: It can take as little as 15 minutes.

You can open a bank account online in about 15 minutes. Some banks advertise times as low as 5 minutes.

Considering the amount of time the average person spends on the internet browsing different ways to cook noodles, that’s a tiny chunk of your day.

Opening an account in person can take longer, more like 20 minutes, which is a lot shorter than eons.

Myth #3: I need to ready a ton of paperwork prior to opening a bank account.

Truth: In most cases, it’s like getting your driver’s license. You’ll need a government-issued ID, a social security number, and your current/previous address(es).

You do not need every single document that proves your existence.

Banks do have to abide by regulations to make sure you are exactly who you say you are. (This is good for everyone.) This can usually be accomplished with a government ID and a social security number, and knowledge about your previous addresses.

Online, you’ll usually have to answer a few more questions to prove you are who you say you are.

If you plan to walk into a bank, call the bank in advance to confirm what’s needed.

Myth #4: I have to transfer everything over from my old bank to open an account with a new bank.

Truth: You can have multiple bank accounts.

You don’t need to close your old bank accounts to open up a new account with a new bank. Many people use 2 or 3 or more banks for different purposes: one for checking, one for savings, one for a CD. One for a loan. One for its special interest rate offer. Mighty helps you do all of this while asking yourself: is some of my money supporting places and causes I believe in? Other people are asking this of themselves, and if you want to, too, start browsing banks.

If you have more questions, considering giving a bank a call and talking to someone. When you call a community-focused bank, you’ll find that the experience of

 
BlogTeam MightyBlog
We helped Chicagoans place $3.5 million in virtual bank deposits as part of Chicago Ideas Week. Here’s the recap.
 

Chicago has 193 different banks—are you banking with one that uses your money in alignment with your values?

Last month, a group of students, small business owners, community organization leaders, and finance professionals gathered to explore this very question as part of our interactive Chicago Ideas Week lab at the University of Chicago Polsky Center for Entrepreneurship and Innovation.

Lab panelists, pictured from left to right: Daniel Ramirez-Raftree, Consultant at Acceleration Group; Jefferey Beckham, Founder at Black Box Creative; Megan Hryndza, Founder & CEO at Mighty and panel moderator; Eliot Abrams, PhD Candidate in Economics at the University of Chicago Booth School of Business; Jabari Porter, Chief Investment Officer at the City of Chicago Treasurer Office; Sophia Wagner, Lead Product Analyst at Mighty & panel coordinator.

Lab panelists, pictured from left to right: Daniel Ramirez-Raftree, Consultant at Acceleration Group; Jefferey Beckham, Founder at Black Box Creative; Megan Hryndza, Founder & CEO at Mighty and panel moderator; Eliot Abrams, PhD Candidate in Economics at the University of Chicago Booth School of Business; Jabari Porter, Chief Investment Officer at the City of Chicago Treasurer Office; Sophia Wagner, Lead Product Analyst at Mighty & panel coordinator.

As covered by Next City, the purpose of the event was for Mighty to share its new beta platform — described by Mighty as being like “Trip Advisor for community-investing banks” — with an audience of lab participants who signed up to make $100,000 of virtual deposits each into banks across the Chicago metro area using the Mighty platform, and to discuss why they made their decisions.

“I put my money in GN Bank, Urban Partnership Bank, and Liberty Bank and Trust because they are each banks with a history of financing black American communities in Chicago,” a lab participant said. Meanwhile, a live poll continuously refreshed at the front of the room, visualizing where lab participants were choosing to make their deposits.

“I put some of my money in a particular bank because I saw that people in the room were putting their money there, and I could on Mighty that the bank is Chicago-focused and puts more of its money in the bank toward community financing than the average bank in Chicago,” a second lab participant said.

“I liked learning about banks that are 100% focused on Chicago,” another lab participant said. “And learning how different people have put together a banking portfolio influenced my thinking, too.”

The lab began with a panel featuring four Chicagoans and the portfolio of banks they used at their organization, or personally. Projected on a large screen behind the panelists were the names of the banks each banked with.

Pictured from left to right: Megan Hryndza, panel moderator; Jefferey Beckham, speaking about his banking portfolio as a small business owner; Eliot Abrams, speaking about his experience with the University of Chicago building its banking portfolio with consideration for a bank’s community impact; Daniel Ramirez-Raftree, speaking as a millennial interested in community development and his banking decisions; and Jabari Porter, speaking about the City of Chicago’s bank portfolio.

Pictured from left to right: Megan Hryndza, panel moderator; Jefferey Beckham, speaking about his banking portfolio as a small business owner; Eliot Abrams, speaking about his experience with the University of Chicago building its banking portfolio with consideration for a bank’s community impact; Daniel Ramirez-Raftree, speaking as a millennial interested in community development and his banking decisions; and Jabari Porter, speaking about the City of Chicago’s bank portfolio.

Jeffrey Beckham, Founder of Black Box Creative, spoke from the point of view of a small business owner. Beckham said he used different banks for different reasons: one strictly for transactional purposes, and another for the values-aligned, neighborhood-oriented relationships it offers his business and the other small businesses he works with.

Eliot Abrams, a PhD candidate in economics at the University of Chicago Booth School of Business, spoke about his role while an undergraduate student at the University of Chicago to work with his classmates to prompt the University to place $1 million of university deposits into banks focused on making community investments. (A case study of the student-led campaign was written up by Democracy Collaborative, here (see page 33)). Abrams said that getting the university to agree to making the deposits required just a few short meetings.

Abrams explained that as part of his senior class’ community outreach initiative, he and his fellow students asked the university to move some of its money on deposit in FDIC-insured banks to others that were equally insured but more focused on financing small businesses and housing in neighborhoods around the university. According to Abrams, both students and university officials agreed that making a deposit in a community-investing bank was an easy and low-risk way for the university to make an impact.

Daniel Ramirez-Raftree, a NY-based consultant with Acceleration Group, spoke about his decision to use both a global bank and a Chicago-focused bank.

Ramirez shared that he moved to New York City to advance his career after two years of working with Urban Partnership Bank in Chicago, which he learned about while a student at the University of Chicago. Ramirez-Raftree said that he maintains an online savings account with the Chicago bank to keep a connection to Chicago community.

“While it’s true that I could perhaps make a higher interest rate if I put my money in an online-only bank, I did the math and decided that the small bump in interest isn’t worth my sacrificing my aligning my money with my values,” Ramirez-Raftree said, adding that his interest rate from Urban Partnership Bank is better than that offered by some global banks. “I know community-investing banks make many small loans and this is more costly than only making large loans, so I understand why a community-centric bank may not always offer market leading rates.”

Jabari Porter, Chief Investment Officer with the City of Chicago’s Treasurer’s Office, highlighted the City’s placement of $20 million of deposits with GN Bank as part of the City’s initiative to build a bank portfolio that balances the City’s financial management needs with its commitment to support community investments in neighborhoods across the city. Porter encouraged the audience to engage their local representatives if municipal deposits were something a community was interested in attracting to its locally-focused neighborhood bank(s).

Lab participants began placing their virtual deposits using the Mighty platform at the conclusion of the panel having listened to the experiences of the panelists, and by exploring bank impact data on Mighty and conferring with the ideas of fellow lab attendees.

Lab participants at Mighty’s Chicago Ideas Week lab: How to Pick a Community-Focused Bank.

Lab participants at Mighty’s Chicago Ideas Week lab: How to Pick a Community-Focused Bank.

Sophia Wagner, Lead Product Analyst at Mighty, left, speaks with panelist Eliot Abrams, PhD student at the University of Chicago Booth School of Business, right, at Mighty’s Chicago Ideas Week lab: How to Pick a Community-Focused Bank.

Sophia Wagner, Lead Product Analyst at Mighty, left, speaks with panelist Eliot Abrams, PhD student at the University of Chicago Booth School of Business, right, at Mighty’s Chicago Ideas Week lab: How to Pick a Community-Focused Bank.

Here’s a summary of the three ways in which the lab participants chose to place their virtual deposits.  

 
 

1 - Chicago Lab participants chose to make their deposits with banks that put the majority of their deposits to work in Chicago.

At the start of the event, lab participants learned that among the 193 different banks with a branch or HQ office in the Chicago metro area, just 7% of these banks’ total deposits are at work in Chicago.*

After engaging with the Mighty platform, lab participants made clear that the banks in Chicago that put the majority of their deposits to work in Chicago are of special interest.  

In the course of the simulation, lab participants overwhelmingly chose to deposit their virtual cash with Chicago-focused banks putting the majority (if not all) of their deposits to work in Chicago. Specifically, 18 of them.

This resulted in the lab participants’ virtual deposits supporting banks that put 96% of their deposits to work in Chicago, versus the 7% of deposits at work in Chicago according to the status quo Chicago bank industry average.

 
 

STATUS QUO

Where deposits are at work* among all Chicago banks**

LAB SIMULATION

Where deposits are at work* among all Chicago banks chosen by lab participants***

*Deposits at work is the share of bank deposits held in branches in the Chicago metro area as a percentage of Chicago banks' total domestic deposits. **All Chicago banks includes banks in the US with a branch or HQ office in the Chicago metro area. Data source: FDIC Summary of Deposits Survey, Q3 2017. ***All Chicago banks chosen by lab participants includes banks in the US with a branch or HQ office in the Chicago metro area with which lab participants chose to place virtual deposits as part of Mighty’s Chicago Ideas Week lab.
 


2 - Chicago Lab participants deposited their money with 18 different banks, most all of which are focused on financing the real economy, and many which are focused on financing populations where equity historically lacks.

“An immediate benefit of Mighty is seeing that there are many more bank choices in Chicago — and differentiated bank choices — than I had ever realized,” a lab participant said.

Through the course of the simulation, lab participants deposited their virtual cash into 18 different banks.

Of the $3.5 million of total virtual deposits placed:

  • 88% or $3.08 million was deposited with banks focused on financing the real economy, which Mighty also refers to as the neighborhood economy or communities, in the form of community loans and investments.**

  • 61% or $2.14 million was deposited with banks certified for their focus on financing poverty alleviation.**

  • 35% or $1.23 million was deposited with banks certified for financing Black American Equity in communities.**

  • 17% or $595,000 was deposited with banks certified for financing Asian American Equity in communities.**


LAB SIMULATION

Types of banks with which lab participants collectively placed $3.5 million of virtual bank deposits

 

**Real Economy focused banks, which Mighty also refers to as community- or neighborhood-focused banks, are banks that put more of their assets into financing business loans, housing loans, construction loans, municipal loans and securities, farm loans, and household loans than the bank industry average in the US, as reported on the Financial Institutions Examination Council (FFIEC) Call Report, Q3 2017. Examples of non real economy financing by banks includes assets in the bank, like trading assets, used to invest in financial markets, and assets used to cover bank operating expenses. **Poverty Alleviation certified banks are banks certified by the U.S. Department of the Treasury for making the majority of their loans for the economic benefit of low- and moderate-income communities. Banks receiving this certification are certified as Community Development Financial Institutions, or CDFIs, Q3 2017. **Black American and Asian American Equity certified banks are banks certified by the Federal Deposit Insurance Corporation (FDIC) for being either (1) majority owned by individuals that are of a minority group, or (2) governed by a majority of individuals (at the Board level) that are of a minority group and the bank primarily serves a population pertaining to the minority group.


3 - Chicago Lab participants created $1 million of new community investment, mostly in the form of business and housing loans.


Of all of the money in all of the banks with a presence in the Chicago metro area, 40% of the total money in these banks is used to finance the real economy across the US in the form of loans and other community financing for businesses, farms, housing, construction, public works, and consumers.

Using the Mighty platform, lab participants made deposits with a consideration for banks that put a larger share of their total bank money (60%-85%+) into community financing than the bank industry average (45%).

The 18 banks selected by lab participants collectively put 74% of their total assets into community financing.

In result of the simulation, the virtual deposits created an 85% (or $1.2 million) increase in community financing, mostly in the form of business and housing loans, versus the community financing that would result from the deposits having been made in a network of banks that behave like the Chicago bank industry average status quo.

STATUS QUO VS LAB SIMULATION

Percentage of money in Chicago metro area banks (Status Quo) that is invested into the real economy, or communities, versus the percentage of money in lab participants’ chosen banks (Simulation Cohort) that is invested into the real economy.

Money invested into the real economy, which Mighty also refers to as community- or neighborhood-focused financing, is the sum of business loans, housing loans, construction loans, municipal loans and securities, farm loans, and household loans as a percentage of total bank assets, as reported on the Financial Institutions Examination Council (FFIEC) Call Report, Q3 2017. Examples of non real economy financing by banks includes assets in the bank, like trading assets, used to invest in financial markets, and assets used to cover bank operating expenses. All Chicago metro area banks includes banks with a branch or HQ in the Chicago metro area, as reported on the Summary of Deposits Survey, Q3 2017. Averages weighted by bank size.
 
 

The event, of course, was a simulation. But if a group of 35 lab participants controlling a sum of $3.5 million could create $1.2 million of new community investments through the low-risk, relatively easy yet intentional placement of deposits with Chicago and real economy focused banks, imagine what a larger group of committed organizations and individuals could do for the city.

"The simulation was really eye-opening,” said a small business consultant in attendance at the lab. “I work with a network of small businesses and its powerful to know there is a whole network of banks specialized in financing community investments like loans for small businesses in different neighborhoods with diverse needs. I’ll use Mighty as a resource to better advise my small business clients interested in bank relationships that match their needs and ethos.”

 
 
BlogTeam MightyBlog
Your money isn't sitting in your bank.
 

When you deposit your money in your bank, your bank uses your money to fund loans and investments.

If you thought this is what your money was doing in the bank, you were wrong.

If you thought this is what your money was doing in the bank, you were wrong.

So your money in your bank is in motion, put to work in the world to finance the economy.

How much money are we talking about?

The public has a lot of money in banks. $11.27 trillion to be exact, equal to about 60% of US GDP.

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The total net worth of Bill Gates, Warren Buffett and the 20 wealthiest investors in the US combined is a fraction of the total money America keeps on deposit in the bank.

This money is community capital. 93% of the American public has some money in a bank account.

Americans put trillions of dollars into bank accounts with limited regard for the trajectory of their funds.

Why? Because money in the bank is not equal to money under the mattress. It doesn't just sit there. 

 

Only 10% of your deposit stays in bank. Up to 90% is lent out in the economy.

This money on deposit in the bank -- in checking accounts, savings accounts, CDs, money market accounts and other deposit accounts -- is making an impact.

We all know the simple idea: you and your community put cash into the bank. The bank lends this money out to community looking for a loan. The bank earns interest on the loan, and gives you a slice of the interest gained while keeping the rest for itself as profit.

All the while, the bank keeps enough money on hand so that you can get your cash out whenever you need it. 

The story is a bit more complicated in practice. Banks are focused on financing different markets. But deposits in, loans out is a sufficient framework to think about when discussing one of the core functions of a bank.

Consider Bank A versus Bank B.

Community A puts money into Bank A. Twenty eight percent of the money in Bank A is lent to small business owners in Chicago. 

Community B puts money into Bank B. Seven percent of the money in Bank B is lent to businesses across the country.

If you want to your money to go towards growing small business in Chicago, you might consider banking with Bank A.

If you're building a small business in Chicago, you might consider banking with Bank A.

 

America puts 40% of all of its bank money into 0.1% of its banks. The other 99.9% of banks may be of interest to you. You have more bank choices than you may realize.

Chances are, you've never heard of 99.9% of the banks in the country.

America has nearly 6,000 banks. If you include the nation’s credit unions, this is around 12,000 banking choices. You have choices in banks than you may have never considered. 

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Your bank invests your money according to your bank's values. Find banks that share yours. 

 
 
BlogTeam MightyBlog