GreenChoice Bank: Green Services You Can Bank On
Going green as a business makes economic and environmental sense, even in tough economic times. It also provides opportunities to make a positive difference in a community. Like any business venture, a green business requires investment capital and banking services. GreenChoice Bank, led by co-founders, Steve Sherman and Jon Levey, is targeted specifically to address the unique financial needs of green businesses in the Chicago area. Both Levey and Sherman are LEED Accredited Professionals (APs).
Blue Planet Green Living (BPGL) interviewed ecopreneurs Levey and Sherman from their Chicago offices to find out more about the GreenChoice Bank, the advantages the bank will provide to its customers, and the Green Exchange building that the bank will be housed in.
BPGL: The concept of a green bank is new. How do you define your “greenness”?
SHERMAN: The greatest element is the holistic approach we take to sustainability. It’s not just, “Go green: We have online banking.” Sustainability is informing every aspect of how we organize the bank; from our location in the Green Exchange to our future locations, we will be environmentally responsible. Our back office will use the latest technology in image-based check processing and electronic document distribution. We’ll offer advantageous terms on loans and deposits for customers who embrace a sustainable lifestyle.
LEVEY: This extends to our employees, as well, such as taking public transportation, hiring from within our community, and supporting local businesses. We’re also designing a zero percent auto loan — for employees only — to purchase hybrids or cars that get at least 35 miles per gallon. We want to exhibit a genuine approach to sustainability.
SHERMAN: We’re looking to create an opportunity for people to make values-based choices about where they bank and to work together about environmental choices. We’re on a shared journey toward doing the right thing.
LEVEY: We don’t sit in judgment on our clients or prospective clients. We assist them to make greener choices in their lives.
BPGL: If a building owner decided to retrofit with energy-saving improvements, would you give that owner better loan terms?
LEVEY: In base terms, if someone is remodeling an income-producing property and doing so responsibly, there’s likely some additional cost to that up front. Most financial institutions aren’t necessarily weighing those costs, because they look at traditional underwriting models based on traditional improvement costs and returns. But, if you are remodeling responsibly, using sustainable principles, you’re reducing your operating costs by increasing operating efficiency of that building. If it’s an income-producing property, and you create operating efficiencies, you are reducing your expenses and increasing your net operating income, and thereby have increased the value of the property. We might lend a little more aggressively on that.
We’ll also offer advantage loan and deposit products for those leading a more responsible life. For example, a real estate developer who is building a LEED-certified condominium development might see advantaged loan terms in loan-to-value, rate, and structure.
BPGL: So green clients might earn more for being green?
SHERMAN: Preferential rates are not determined by how “green” customers are, it’s determined by how they use their account, such as customers who opt out of the paper statement or opt out of check writing in exchange for online banking or those who use electronic bill pay.
LEVEY: We’ll have a signature transaction account that will pay higher-than-market interest rates to those customers.
SHERMAN: It’s one of the many pieces we’re putting together so we can be the bank that lets you make a values-based choice and feel good about who you’re partnering with for financial services. You know we’re putting your money to work better than the bank down the street.
BPGL: When you talk about a “values-based choice,” what does that mean to you?
LEVEY: You make a values-based choice when you choose to drive by the traditional supermarket on your way to Whole Foods. You feel better about making that values-based choice to buy some of the things at Whole Foods even though some items in your shopping cart could have been bought at the traditional supermarket. You shop at Whole Foods (or whatever your local equivalent might be), because you feel that Whole Foods is supporting locally grown, organic and sustainable producers in your area. Similarly, you know when you put your money on deposit with us, it’s being leveraged responsibly, locally, and sustainably by the bank in your community.
BPGL: When you open your doors and have this marketing plan that involves bringing in sustainable clients to a sustainable bank, what will be the element that will keep them there?
SHERMAN: This is a community bank at its foundation. What keeps us excited — and our clients attached — is that we live and work in a society in which banking has become a commodity. A lot of consumers and businesses are feeling the credit crunch now. A symptom of this is that a lot of people have chosen commoditized banking. They’ve forgone the relationship.
At our core, we’re a bank where the customer will be known by, and known to, executive management. You want to bank someplace — to quote Cheers — “where everybody knows your name.” You want to bank where that relationship is. Those who didn’t forget the relationship focus — for the most part, that would be community banks and their clients — are not feeling the credit crunch to the same degree as everybody else. GreenChoice Bank will be high touch, high service, with a twist – a green and sustainable twist.
BPGL: Are you going to commoditize this to spread over a large area?
SHERMAN: Yes and no. We’re seeking a federal charter. This gives us the ability to open branches around the country. We don’t want to commoditize it. We will prove this model in Chicago, and replicate it in other markets with a similar approach once proven here. When we do so, we’ll raise capital locally, gain strong local supporters, and maintain that community touch. We will have a strong local bank.
LEVEY: That’s one of the main reasons why we’ve gone with a federal charter as opposed to a state charter. But in every case, we will remain true to our community banking roots.
BPGL: If someone in another state wanted to manufacture a green product and needed capital, could they come to you?
LEVEY: Yes. Having our federal charter allows us the ability to lend across the nation with greater ease, but we still need to fully understand each business, its management, and what makes it tick.
SHERMAN: Certainly from a deposit standpoint, they can deposit with us.
BPGL: When you offer electronic banking, what protections will you provide your customers?
SHERMAN: There is a secure paper trail. After all, a check starts as paper. It’s a valid question, but in order for these systems to work online, there are a lot of checks and balances.
We’re outsourcing our back-office systems. We have to go through exceptionally rigorous regulatory hurdles. There’s a lot of regulatory security so nothing falls through the cracks. We feel confident there is no risk to the company or our customers.
LEVEY: As much as we may desire, we can’t be entirely paperless, though.
SHERMAN: We’ll be paperless to the extent it’s permitted by the regulatory agencies. Banks are far more efficient these days. Now, you turn in a check to the bank, they scan it, and that goes through the system much more quickly. It used to sit in the back office waiting for someone to key it in. Then it was shipped to the Federal Reserve Bank, where it would get checked and coded. It used to take several days to clear a check. Now you can get money in your account in a day or two. It not only takes the waste out of the process, but it is also more efficient in a customer-friendly way.
We’re working on incorporating leading-edge technologies — like mobile banking — that makes it easier to bank with us than with traditional banks.
BPGL: Describe what you mean by mobile banking.
LEVEY: Using your cell phone as the point of service for your banking needs and transactions.
SHERMAN: We’re still working on how that gets implemented. Whether a customer can use mobile banking is determined by their phone’s processor capability. If you have mobile banking capability, you can text message to get your balance. Even more functionality will be added to a web-enabled phone.
BPGL: What other leading-edge technology will you implement?
LEVEY: We’ll use remote capture, for example. If you walk into store that is using our remote capture and you pay with a check, they scan the check right at the point of sale, and the paper copy does not need to be forwarded to the bank
BPGL: What motivated you to set up a green bank in Chicago?
LEVEY: Chicago happens to be a particularly ripe arena for this idea. We live in one of the greenest cities in the country. We’re one of very few major cities to have a CEO, meaning a Chief Environmental Officer. One of Mayor Daley’s legacies will be the greening of the city of Chicago.
We both have prior banking experience. I also have real estate development experience. In my real estate business, I noticed that, if you weren’t building green, you were building obsolete. Nobody wants to do anything obsolete. When Steve came to me with this idea, I saw that he was on target and at the right time.
Both of us started our careers in banking at LaSalle Bank, which was the leading commercial bank in Chicago until it was acquired by Bank of America not long ago.
SHERMAN: LaSalle is one of the legendary organizations in terms of relationship banking. We’re taking that orientation toward relationship banking and combining it with values-based banking opportunities; it has a lot of potential and can serve the community very well.
BPGL: When will you open?
LEVEY: That’s not up to us, but we’re in the midst of the regulatory process. We filed our application with the Office of Thrift Supervision (OTS) in June of 2008 and will obtain our deposit insurance through the FDIC. We’re working through the regulatory process as “a bank in organization” and expect to obtain the charter and open in mid 2009.
BPGL: What do you see as your distinguishing characteristics as a bank?
SHERMAN: Today, everybody is making some sort of statement about being green. For most banks, the only statement they can really make is, “We offer online bill pay,” or “Our next branch is going to be LEED certified.” Bank of America is building an incredibly large LEED-certified skyscraper in New York, for example.
What separates us from the rest is our holistic approach. This is by design. The holistic approach to sustainability we’re taking is different from other banks. Huge banks have to leverage their capital, sometimes in areas we might not choose to participate. There’s all sorts of legacy involved.
We want to serve our clients and our community, but if we feel a banking relationship flies in the face of our mission in a very serious way, it might not be the right fit for us.
LEVEY: Not all our clients will be green poster children; however, all our clients will benefit by having access to our greener choices. If we can help someone realize that making green choices won’t impair their life or their business, that serves our mission and our community.
BPGL: The building that will house GreenChoice Bank is going to be a unique facility. Describe the space and your interest in locating there.
LEVEY: The Green Exchange has a good story to tell. It’s a building on the north side of Chicago that was originally an underwear factory and most recently a lamp factory. It’s been vacant several years, and is being renovated to support the green economy. We chose to locate in this building for a certain reason. It’s powerful to take a 270,000-sq. ft. building and fill it with green businesses. And, as far as we know, it’s the nation’s largest self-contained building for green and sustainable businesses. We’re the official bank of the Green Exchange.
BPGL: Will the Green Exchange qualify for LEED certification?
LEVEY: Yes. In fact, the Green Exchange building will be LEED-Certified Platinum. We’re also seeking Platinum certification for our interior space.
When our clients walk through our bank, they’ll see visual cues for greener choices they can take back with them. They’ll see imagery in our space depicting the components that went into making the bank green. They’ll see plaques or notices that describe things we’ve done that they can do at home — things that have low impact to their personal lives and that aren’t hard to do, but that make a difference and have high impact to the environment and our community.
BPGL: Will you have a large space?
LEVEY: It’s not a behemoth space. We have very efficient use of space and consider that to be integral to our mission.
One thing attractive about locating in the Green Exchange is that the building offers some shared conference abilities and private dining spaces, so we don’t have to incorporate that space into our bank and pay for a large boardroom that we may only need one time per month. Rather, we can use the shared space within the building and keep our interior space efficiently operating for core business needs.
BPGL: Are there any financial or tax incentives for businesses to locate in the Green Exchange?
LEVEY: The building is located within an economic empowerment zone, and the city and First Ward Alderman, Manny Flores, are definitely behind the green collar job creation that it will foster. Additionally, the Green Exchange and LEED Council (Local Economic & Employment Development Council) have received a half million dollar ($500,000) federal Community Economic Development (CED) grant from the Office of Community Services (OCS) in the Administration for Children & Families (ACF) of the U.S. Department of Health & Human Services (HHS). This grant is for a small business loan fund for tenants of the Green Exchange that agree to hire federally designated low-income individuals. That fits our sustainability mission.
They’ve put together a loan committee to dole out that money, for which I have been asked to sit and lend some expertise. The funds will be loaned at prime minus 3%, tied to how many people the business applicant, who must be a tenant within the Green Exchange, hires. For two qualifying hires, the business will qualify for just north of $17,000 in loan proceeds. It’s a unique program to further sustainability and job creation in this area, and we are very pleased to be supporters of the program. When the lamp factory shut down, a lot of people lost their jobs. It’s nice to see this building redeveloped for the sustainable business community and to see it creating local job opportunities.
BPGL: Your name is GreenChoice Bank. If you google the word “green,” you’ll find almost a billion green things; the word “green” is ubiquitous. We read an editorial in a small newspaper near Lake Michigan that declared they won’t type the term “green” again in the paper because of a backlash against it. Are you at all concerned that “green” as a term may become boring and overused?
SHERMAN: That’s potentially going to happen with any sort of phenomenon that gets popular quickly and covered a lot. It’s not surprising to have a so-called backlash, because not everyone is going about it in the right way. There’s greenwashing, for example.
What Jon and I agree on is that the concern over the future of our planet and the health and well being of future generations won’t go out of style. How you communicate it may change over time, but the underlying intent will stay. We talked about it as we named the bank. “Will the word ‘green‘ be obsolete?” We are taking a calculated risk. “Green” encompasses so many things about what we are and helping our clients make greener choices. But we’re confident that what our mission stands for won’t ever go out of style.
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