Building On Thoreau’s Legacy In the Banking Industry

Walden Mutual – a new digital bank focused on sustainable food – has become the first bank of its kind to receive regulatory approval from the FDIC in 50 years. Its origins are unique. Founded by the former CEO of a pasture-based meat business, it’s a unique interweaving of disparate threads – digital technology, sustainable food, cooperative governance, and a distinct regional focus.

I recently talked to 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 founds a successful pasture-based meat business end up starting a bank?

Charley Cummings: Well we had developed an amazing set of partner farms in the supply chain at Walden Local – which is a brand of sustainable local meat here in New England and New York – and it was increasingly clear that they all needed capital. It suggested a gap in the existing lending infrastructure that extended from production farms to food retail businesses, and everything in between.

At the same time, there’s been this massive flow of capital into impact investment. There is a huge segment of the population that has a strong desire to align their investments with a set of underlying values and impact they want to see in the world. Case in point: Impact investment is now a multi-trillion dollar asset class (depending on who you ask). But a lot of the public funds out there attempting to meet this need leave a lot to be desired from an actual impact perspective. They are mostly “do less harm” – which is a model for socially conscious investment from 10 years ago or more. Today’s model asks: How do I use my capital to affect positive change?

Subsequently I saw the headline that the top-10 banks had invested more than a trillion dollars in fossil fuel development since the Paris Accords were signed…and realized that we had long ago lost the connection portrayed in “It’s a Wonderful Life” between borrower and depositor. People didn’t realize where their dollars were spending the night!

So that was really the beginnings of the lending side of the balance sheet, and the deposit side, respectively.

Then step one was to assemble the team to actually go after this – which has become this beautiful mix of industry experts (e.g. our COO and CFO have a combined 70 years of banking experience, and our senior ag lender has been doing this for 30+ years) and outside experts (e.g. our VP of product and head of marketing come from a combination of design, technology, and food backgrounds). I’m a big believer that that mix is what yields real innovation.

Marquis: When can people open accounts, and what kind of financial products do you plan to offer?

We are opening in the coming weeks! Individuals and businesses can open “Grow Local” accounts, which are accounts that pay competitive interest like savings accounts, but allow for 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 extended duration CDs that represent a long-term commitment to what we view as a long-term endeavor!

And all of our lending will be to the food and agriculture businesses we’re focused on supporting – with loan values ranging from $50,000 to $4M or more. We have loan products for anything they might need help with – equipment financing, real estate, working capital, etc.

Marquis: I can see on the loan side that your focus on sustainable food and agriculture businesses will be an asset for those type of ventures. How about on the deposit side? Do you think customers care at all about your mission? How will you attract them?

Cummings: We’ve been very pleasantly affirmed by peoples’ response to our message and mission. It’s very clear that there is a large population of people (both young and old, urban and rural) who care deeply about things like sustainability and local food – to the point of considering it part of their own identities. 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 (inclusive of financial and experiential benefits), getting people excited about what we’re building has felt very organic.

Marquis: What makes this venture different from what else is out there – digital banks, fintechs, credit unions, etc.?

Relative to digital banks – we wanted to achieve a similar level of excellence on UI/UX, but in the age of ephemeral e-commerce brands (or “blands,” as they have been referred to) that all look and feel the same, we’re also intent on having local, tangible impact; not just doing less harm, but fueling a renaissance in our local food ecosystem and building a community around that mission.

Relative to other banks — with only a few exceptions, it felt like most other consumer categories – clothing, cosmetics, cleaning products – have built much more compelling mission-driven brands than anything you’d find in banking. And clarity of purpose for us – centered around local, sustainable food and agriculture – naturally lent itself to building this type of brand.

Marquis: What’s the story behind the name – “Walden Mutual”?

Cummings: Thoreau’s writings – and the transcendentalist ideals of living simply and in concert with nature – have always resonated with me, and philosophically align with the brand we’re building. It is also quintessentially a New England term.

Marquis: Walden Mutual obtained the first new mutual bank charter from the FDIC in 50 years. Why did you organize as a mutual? What’s special about this structure?

Cummings: The choice to structure the bank as a mutual – which means the bank is ultimately cooperatively owned by its depositors rather than stockholders – was also a natural response to the types of systemic issues we’re targeting. Climate change and inclusivity 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 result either, if your objective is change over the long-haul. So we needed an organizational structure that would align us with the long term nature of the impacts we were trying to have in the community. The mutual structure offered true longevity in that regard.

Marquis: The bank is in the process of securing full B Corp certification (it’s pending presently), and your mission is centered on “sustainable agriculture and food businesses”. How does social and environmental responsibility fit into the vision for what your building?

Cummings: Well for starters, it is not an afterthought or a side business – it is our reason for being. We often say that we’re 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 essentially enable folks to do this.

For individuals, we want to be a true partner that enables them to align their financial lives with their values as part of a broader community. For businesses and farms, we provide customized financing solutions from people who truly understand the nature of this ecosystem. And in tying these two constituencies together, 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 stewardship of natural resources.

More tactically, one mechanism we’ve developed is an annual impact assessment – modeled closely on the B Corp standards. It allows us to rigorously assess social and environmental responsibility-related progress over time, both for individual borrowers and in aggregate across our entire lending portfolio.

Marquis: What do you hope Walden Mutual looks like in 5 years? What’s the long-term vision?

Cummings: In five years, I hope we’ve made significant progress in realizing the goals of our mission; that our local food ecosystem looks substantially different – in part due to our work. I imagine our market positioning evolving, where we work as a platform that draws tighter connections between the members of the food ecosystem (e.g. connecting food consumers more directly to the businesses that produce what they eat). Imagine a true community of depositors who actually know the bank’s borrowers. And we also hope to challenge the default conception of how a bank relates to the people it serves. Today, even the most progressive banks are competing to provide the same set 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 emanated from a deep alignment between their financial behaviors and their values? That’s a question we hope to find answers to as we grow.