USC Price School of Public Policy

Should banks support positive social outcomes? Beneficial State Bank CEO Kat Taylor shares lessons

February 26, 2018

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Kat Taylor with Gary Painter, director of the USC Sol Price Center for Social Innovation (Photo by Tom Queally)
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By Matthew Kredell

Beneficial State Bank CEO Kat Taylor (Photo by Tom Queally)

Banking is a powerful, publicly endowed system that should serve a public purpose, but hasn’t done so in some time, asserted Beneficial State Bank CEO Kat Taylor during a Feb. 8 speaker series event presented by the USC Sol Price Center for Social Innovation.

Taylor, along with her husband, Tom Steyer, founded Beneficial State Bank in 2007. With 17 branches throughout California, Oregon and Washington, the bank is a Community Development Financial Institution and Certified B Corporation with the mission to bring beneficial banking to low-income communities in an economically and environmentally sustainable manner.

“Beneficial State Bank is innovative by design and mission, so we can change the banking system for good,” Taylor said. “If you don’t know where your money is sleeping at night, it is most likely working against your most treasured values.”

Calling banks the original and most powerful form of crowdfunding, Taylor contended that 95 percent of the assets under control of the biggest banks do not support positive societal outcomes.

She noted that, in the past five years, banks have provided $250 billion to finance the coal industry, supporting fossil fuel’s grip on the economy, while also keeping in business the private prison system that leads to mass incarceration.

“We can stop riding that train of misery and fix the banking system together,” Taylor said. “We can take back our power of choice, align our banking with our values, and pioneer a new model that shows the bigger banks the best practices for how to migrate deposit equity in human capital.”

Investing in the community


To watch the full video of the speaker series event, please click here »

Beneficial State Bank, which controls nearly $1 billion in assets and employs 260 people, works to serve customers, employees, communities, the planet and shareholders in equal measure. While maintaining a focus on being a profitable enterprise, Taylor said she doesn’t want the bank to have more than a 10-percent return on equity, or else they are either not paying the employees well enough or are charging customers too much.

Each year, the equivalent of between 5 and 10 percent of bank profits is recycled back into the communities the bank serves through a locally based sponsorship program. Beneficial State Bank’s lending practice commits at least 75 percent of loan dollars to support nonprofits and businesses that align with the bank’s social and environmental mission, and the remainder cannot work against that mission.

“What we’re trying to restore is people power,” Taylor said. “We have too much dollar power right now, not just in electoral politics but in the economy.”

With $1 billion being a drop in the bucket of a $12 trillion system, Taylor stated that Beneficial State Bank is in the process of creating a playbook for how other banks can prosper economically while catalyzing positive change.

“We know it’s not good enough to be a good bank in a bad system and that we can’t replace that system, so we need allies,” Taylor said. “The point is not to operate this ourselves but to hand it off to large banks so that they increasingly migrate to the model we have and win the market-share war in the process.”