Think your job is tough?

• Author: Koonce, Richard
• Position: Inner-City: Banking

It's far more difficult trying to market bank products and services in an impoverished, ethnically mixed inner-city community. But, the International Bank of Chicago has accomplished much in this unforgiving market. You might learn a thing or two from its approach.

Imagine working in a market where most prospects are low-income immigrants in file habit of hoarding their cash under the mattress. Picture a place where the majority of the commercial prospects are struggling start-up businesses owned by someone who barely speaks English.

These are marketing challenges faced every day by the International Bank of Chicago (IBC), a minority-owned community bank with its headquarters on the North Side of the Windy City. Since it was founded more than a decade ago, the bank has achieved profitability while marketing its products and services under highly adverse conditions. How IBC accomplished this feat is a story that offers lessons to many bank marketers--and not just those in inner cities.

IBC is a Community Development Financial Institution (CDFI). It's mission is to bring urgently needed retail and commercial bank services to minority populations--mostly Asian, Hispanic, and African-American retail customers and small businesses--in the Chinatown, Uptown and Lawndale sections of the city" and in close-in suburbs like Stone Park, Melrose Parr and Bellwood. (CDFIs are private-sector, financial intermediates with community development as their primary mission.)

Attracting customers in these neighborhoods is challenging, says Robert Klamp, the president and CEO, since many of the residents fall into the category of the "unbanked." Many are distrustful of financing institutions, having been victimized in the past by predatory lending practices or other unscrupulous monetary schemes. Joblessness, illiteracy and language barriers am problems too. Many residents have suffered home foreclosures or business failures, making them unattractive to traditional financial institutions.

An uphill challenge

So, why would anybody establish a bank in a community where there am so many downside risks just in attracting customers, but aim in realizing a decent return on bank assets? It's a legitimate question: one that Klamp likes to answer.

IBC was established in 1992 in response to growing concerns over predatory lending practices prevalent at the tithe in Chicago's low-income and ethnically mixed communities, he says. The Dank was founded on the idea of serving the needs of customers who don't have recourse to other financial institutions and who would otherwise rely on cheek cashing services, currency exchanges, even predatory lenders.

"We've discovered in the last 12 years that we've had a strong impact on the communities where we operate. And that our bank has managed to prosper as well," says Klamp. During those years, Klamp has increased IBC assets from $20 million to $115 million. Meanwhile, return on assets in 2003 averaged over 3 percent, well above industry standards.

So, what's the secret to IBC's success? Klamp says it stems from his bank's ingenuity in tailoring marketing efforts to the unique inner-city environment where it operates. Klamp says it's a marketing recipe that consists of seven key ingredients:

Step 1: Focus on ways your bank can generate jobs. In...