By Peter Liu, Initial Founder and Vice Chairman of New Resource Bank
When friends learned that I was working to start a bank, I was most often asked these two questions: “When do I get a toaster?” and “People can start a bank?” While the first is a joke that’s a bit dated, the second actually reflects what a good number of people think about a bank. A bank is just there…often times “since 1890” or since a long time ago.
Banks in the U.S. are major aggregators of money…with over $17 trillion of federally insured deposits at last count. People in the U.S. have more bank accounts than brokerage or internet accounts combined. The “everyday, safe and conservative” qualities of banks can still carry a big punch. At the same time “everyday” is changing as we speak. A bank branch with a big vault or safe is very much part the “since 1890” aspect of banking. But the growth of ING Direct from zero to $40+ billion in deposits through an online business model represents exciting change.
In the early 21st century, activists pressured big banks to review their environmental impact actions and strive for “less bad” (e.g. re-examine their financing of rainforest destruction and adopting the Equator Principles). Today, we think it’s high time that banks work to promote “more good”: financing businesses and projects that make a difference. This is opportune as the green and sustainability movements have now evolved into markets as exemplified by organic and clean tech.
The New Resource Bank very much focuses on “more good.” Starting from our first office in San Francisco, we set out to provide a new standard in customer service and finance efficient and sustainable resources in our community. We do so by providing differentiated financing to green businesses and by taking “green” to our community clients.
Since our opening in September 2006, we have been able to roll-out several innovative programs to finance sustainable resources. We introduced a “more money at a lower cost” program for green buildings. Loans for buildings that are designed and built to a green leadership standard will enjoy lower interest rates (1/8th percent) and higher loan to value. This will result in significant enhancement to a developer’s return for building green. In partnership with SunPower, we have also introduced an easy one-step residential solar financing program so home owner can own solar by simply paying a monthly bill close to or less than their current electric bill. Additionally, we are also providing growth financing to innovative companies such as Michelle Kaufmann Design, which is commercializing revolutionary green modular housing units and NextEnergy, which is rapidly growing solar system integrators.
Focusing on entrepreneurs is second nature to us as we are founded by leading entrepreneurs. Our 240 founding investors have helped build leading companies such as Sybase, Lotus Development, Hambrecht and Quist, Ofoto and Silicon Valley Bank. These core members of the New Resource Community also provide us with great green business expertise. Founding shareholders like Bob Epstein (co-founder of Sybase and Environmental Entrepreneurs) and Hal Harvey (Environmental Program Director of the Hewlett Foundation) have been instrumental in promoting policy change that fosters the market for clean technology. Other shareholders like Ray Anderson (founder of Interface Inc.), Jonathan Rose (pioneering builder of sustainable communities) and Paul Dolan (former President of Fetzer Vineyards and co-founder of Mendocino Wine Company) have built and managed successful companies that are pioneers in sustainability.
We also learn about green through our own every day actions. For example, our building has been designed and built with extensive use of efficient, renewable and recycled resources. We are currently applying for a LEED-CI (Leadership in Energy and Environmental Design) certification that is tracking Gold.
In comparison to our entrepreneurial core, the banking sector is led today by mega-banks that are formed from successive mergers. Asset and cost rationalization are the keys to making such mergers work, not inventing new businesses. Striving to deliver growth significant and fast enough leads to growth by acquisition. Creating uniformity among a super regional or multi-national platform also causes the mega-banks to standardize operations and underwriting. This also hinders the customization needed to serve an emerging business community. Community banking indeed has been an antidote to mega-banking. Our hopes for New Resource Bank is to redefine community banking by serving not just a “zip-code” community but one that also shares common interests and values in sustainability.
“Everyday transformation?” We hope so. By switching an everyday function such as banking, our clients’ checking, savings or business deposits will help finance sustainable resources. This is just one part of many wonderful “everyday” possibilities. What’s next? Properly inflating our tires to save million of gallons of fuel?