Walden Mutual obtained the FDIC’s first new reciprocal banking charter in 50 years – meaning the … [+]
Walden Mutual – a new digital bank focused on sustainable food – is the first bank of its kind to be approved by the FDIC in 50 years. Its origin is unique. Founded by the former CEO of a pasture meat company, it is a unique interweaving of disparate threads – digital technology, sustainable food, cooperative governance and a clear regional focus.
I recently spoke with Charley Cummings, the bank’s founder, about his new project and vision for a more sustainable type of bank.
Christopher Marquis: How does an entrepreneur who sets up a successful meat business in the meadow eventually start a bank?
Charley Cummings, the founder of Walden Mutual Bank
Charley Cummings: Well, we had developed an amazing array of partner farms in the supply chain at Walden Local – a brand of sustainable local meat here in New England and New York – and it became increasingly clear that they all needed capital. It suggested a gap in the existing credit infrastructure that stretched from manufacturing farms to food retail companies and everything in between.
At the same time, there has been a huge flow of capital into impact investments. There is a huge segment of the population that has a strong desire to align their investments with a range of underlying values and impact they want to see in the world. Example: Impact investing is now a multi-trillion dollar asset class (depending on who you ask). But much of the public resources out there to meet this need leave a lot to be desired from an actual impact perspective. They are mostly “do less damage” – which is a model for socially conscious investments from 10 years or more ago. Today’s model asks the question: How do I use my capital to drive positive change?
Then I saw the headline that the top 10 banks had invested more than a trillion dollars in fossil fuel development since the signing of the Paris accords… borrower and depositor. People didn’t know where their dollars were spending the night!
So that was actually the start of the credit side of the balance sheet and the deposit side, respectively.
Step one then was to assemble the team to actually go after this – what this wonderful mix of industry experts has become (for example, our COO and CFO have a combined 70 years of banking experience, and our senior ag lender has been doing this for over 30 years) and external experts (e.g. our VP Product and Head of Marketing come from a combination of design, technology and food backgrounds). I am firmly convinced that this mix produces the real innovation.
marquis: When can people open accounts and what kind of financial products do you plan to offer?
We will be opening in the next few weeks! Individuals and businesses can open ‘Grow Local’ accounts, which are accounts that pay competitive interest, such as savings accounts, but allow all the transactional features of checking accounts (debit card, checks, etc.). Consumer depositors also get access to a “Summer Farm Dividend” that they can use to spend at local farms, farmers’ markets and other local food vendors. We also offer CDs, including longer-term CDs that represent a long-term commitment to what we see as a long-term effort!
And all of our loans will be made to the food and agriculture companies we target — with loan values ranging from $50,000 to $4 million or more. We have loan products for everything they need help with – equipment financing, real estate, working capital, etc.
marquis: I see on the loan side that your focus on sustainable food and agriculture businesses will be an asset to those types of businesses. What about the deposit side? Do you think customers care about your mission? How are you going to put them on?
cumshot: We have been very pleasantly confirmed by people’s response to our message and mission. It is very clear that there is a large population of people (young and old, urban and rural) who attach great importance to things like sustainability and local food – to the point that they see it as part of their own identity. When you take that level of resonance on values, combine it with the best parts of technology and design, and then add a very tangible value proposition (including financial and experiential benefits), getting people excited about what we’re building felt really good . biological.
marquis: What makes this venture different from anything else out there – digital banks, fintechs, credit unions, etc.?
Relative to digital banks – we wanted to achieve a similar level of excellence in UI/UX, but in the age of e-commerce brands (or ‘bland’, as they’re called) that all look and feel the same, we also want to have a local, tangible impact; not only do less damage, but fuel a renaissance in our local food ecosystem and build a community around that mission.
Compared to other banks – with only a few exceptions, it felt like most other consumer categories – apparel, cosmetics, cleaning products – have built much more compelling mission-driven brands than anything you’d find in banking. And a clear goal for us – centered around local, sustainable food and agriculture – naturally lent itself to building this type of brand.
marquis: What is the story behind the name – “Walden Mutual”?
cumshot: Thoreau’s writings – and the transcendentalist ideals of living simply and in harmony with nature – have always stayed with me and philosophically align with the brand we are building. It is also quintessentially a New England term.
marquis: Walden Mutual obtained the FDIC’s first new mutual banking charter in 50 years. Why did you organize yourself as a mutuality? What is special about this structure?
cumshot: The choice to structure the bank as a mutual fund — meaning the bank is ultimately co-owned by its depositors rather than shareholders — was also a natural response to the kind of systemic problems we’re targeting. Climate change and inclusiveness in lending, for example, are not going to be solved in the next 3-5 years. And being sold to Global Megabank Incorporated isn’t an acceptable outcome either, if your long-term goal is change. So we needed an organizational structure that would align with the long-term nature of the effects we were trying to have in the community. The mutual structure offered a real lifespan in that respect.
marquis: The bank is in the process of getting full B Corp certification (it’s currently pending) and your mission statement is focused on “sustainable agriculture and food businesses”. How does social and environmental responsibility fit into the vision of your building?
cumshot: For starters, it’s not an afterthought or an afterthought – it’s our reason for being. We often say that we are really only a bank as a means to an end. Our core ethos is that anyone can make positive and lasting change to our local food ecosystem… and our mission is to empower people to do so.
For individuals, we want to be a true partner that empowers them to align their financial lives with their values as part of a wider community. For businesses and farms, we provide tailored financing solutions from people who truly understand the nature of this ecosystem. And by connecting these two grassroots, we hope to build a more robust and sustainable local food movement, support the vitality of our local food and agricultural economy, and promote good management of natural resources.
Tactically, one mechanism we have developed is an annual impact assessment, which is closely aligned with B Corp standards. It allows us to accurately assess progress in social and environmental responsibility over time, both for individual borrowers and in aggregate across our entire loan portfolio.
marquis: What do you hope Walden Mutual will look like in 5 years? What is the long-term vision?
cumshot: I hope that in five years’ time we will have made significant progress towards achieving the goals of our mission; that our local food ecosystem looks substantially different – partly because of our work. I imagine our market positioning evolves, working as a platform that creates closer connections between the members of the food ecosystem (eg connecting food consumers more directly to the companies that produce what they eat). Imagine a real community of savers who really know the bank’s borrowers. And we also hope to challenge the standard view of how a bank relates to the people it serves. Today, even the most progressive banks are competing to provide the same range of financial products and tools that have been available for years. What would it look like if a financial institution wanted to help individuals develop more mindful, emotionally healthy relationships with their money – where they felt a sense of peace that came from a deep alignment between their financial behaviors and their values? That’s a question we hope to find answers to as we grow.
