KeyCorp agrees to review products to consider low and middle income customer needs and with a racial justice lens.
Dear U.S. Environmental Protection Agency Administrator and Members of Congress,
In the Fall of 2020, following a Bankrate survey which found that Blacks and Hispanics reported facing higher monthly fees, including overdraft fees, than white customers typically do, Trillium filed a shareholder proposal asking KeyCorp to look at its overdraft program with a racial justice lens. We were concerned because in 2019, KeyBank collected over $148 million in overdraft and insufficient funds fees – representing over 7% of its non-interest income and 44% of its service charge income – and we could see the potential for some disproportionate impacts on communities of color.
While the company had racial justice programs in place for years and had recently enhanced them, there was no evidence that that KeyCorp, or any bank that we are aware of, was looking at this very specific question around overdraft policies and racial impact. In the wake of the Black Lives Matter protests, this struck us as both a gap and an opportunity for social impact.
Through the end of 2020 and the beginning of 2021, the shareholder proposal led to a series of dialogues with the company where we were able to exchange views and information – generating greater understanding and knowledge on both our parts. The discussions were ultimately productive as we believe we were able to catalyze some new thinking at the company which resulted in KeyCorp agreeing to do the following:
- Engage the Financial Health Network (FHN) as a consultant to deliver a set of recommendations focused on strengthening KeyCorp’s product offerings to address low and middle income customers’ financial health needs, utilizing FHN’s prior research and work on financial health equity;
- Include in this product gap assessment, an evaluation of the racial equity impact of overdraft policies/practices;
- Hold progress update calls with Trillium; and
- Disclose on its Corporate Responsibility webpage the partnership with FHN and, after conclusion of the engagement, enhancements made as a result of the FHN engagement.
We are very pleased that the company will be reviewing its overdraft program with a racial justice lens, and are excited that they will also do an in-depth review of impacts on low and middle income customers. Of course, implementation will be critical and we look forward to ongoing engagement with the company.