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 It's Urban Partnership Bank against the currency exchanges

Currency Exchange

Urban Partnership Bank, a commercial lender in Chicago's South and West Sides, now is taking on the currency exchanges and payday lenders that cash checks and process ordinary transactions for people who don't use banks.

The Chicago-based bank, launched four years ago to carry on failed ShoreBank's mission of serving low-income neighborhoods, recent began offering check-cashing and prepaid-card services to individuals who aren't bank customers at prices that are well below neighborhood currency exchanges.

Providing a consumer alternative to high-cost neighborhood storefronts for simple transactions was something that leaders of renowned community lender ShoreBank at times talked of doing, but never did before that bank failed in a sea of bad real estate loans in 2010.

UPB, which has eight Chicago-area branches and one in Detroit, recently began offering transactional services to non-customers. The lender, which has $833 million in assets, is pricing check-cashing services, a staple in inner-city neighborhoods, more than 30 percent cheaper than typical currency exchanges. Many currency exchanges charge 2 percent to cash Social Security checks, paychecks, tax refund payments and the like. UPB is charging 1.25 percent.

On a $1,000 check, then, UPB would charge $12.50 versus $20 at the typical currency exchange, according to the bank.

The only cheaper player in the market, UPB says, is Wal-Mart, which charges a flat $3 for checks under $1,000 and $6 for checks higher than that.

'GREAT VALUE'

“We work to give people great value but make a nominal profit while doing so,” said Darryl Hendricks, UPB's director of consumer banking.

The ultimate goal is to convince many of them to become bank customers, he said.

In addition to check-cashing, UPB is offering prepaid cards and bill-payment services.

The percentage of residents in low-income neighborhoods who don't have a bank account can be 25 percent or more. Some of those neighborhoods aren't within easy walking distance of a bank branch.

Hendricks is unwilling to forecast the volume UPB expects to handle in its new payment-processing products. He acknowledges that it will be a challenge to make people aware that the bank is offering them and hopes word of mouth will do the trick.