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Black and Latinx communities are underserved by most banking institutions. There’s no reason to sugar-coat that statement; it is a fact. There’s a wide gap between wealth available to white families and businesses and those available to Black and Latinx families and businesses.
In addition to the apparent challenges faced when access to investment is not readily available, this gap also means fewer Black and Latinx people are involved in designing and offering financial products. Lack of representation isn’t just a symptom of the wealth gap; it also causes it.
Black families especially have faced the compounding effects of decades of exclusionary policies and programs contributing to the racial wealth gap. A study by the Selig Center for Economic Growth explains the wealth gap for Black communities finding that money circulates only one time in the Black community, six times in the Latinx community, and nine times in the Asian community. White communities have virtually unlimited money circulation.
This cyclical impediment means its exceedingly difficult for minority groups to save and invest money and protect themselves against financial risks. They aren’t given the tools to do so by traditional banking institutions. Traditional banks do not often design products and services for people hoping to break out of this cycle.
Improved inclusion in the financial system would benefit the entire economy: Black and Latinx families would have more significant opportunities to reinvest and grow wealth, leading to increased economic activity for all Americans.
In an article posted last year, McKinsey said, “Our research shows that financial institutions could realize approximately $2 billion in incremental, additional annual revenue if Black Americans had the same access to financial products as white Americans. If Black Americans reached full parity in terms of wealth with white Americans, financial services companies could realize up to $60 billion in additional revenue from Black customers each year.”
The article goes on to explain how the banking community can help close this gap. It boils down to having access to money that has been made affordably available to underserved communities. Fully understanding and responding to the challenges our communities face when trying to capture and retain wealth.
At Greenwood, a modern digital banking platform for Black and Latinx individuals and businesses, we have surpassed 500,000 sign-ups for our virtual banking services in just 100 days. Our founders include civil rights leader Andrew J. Young; rapper and activist Michael “Killer Mike” Render; and Ryan Glover, founder of the Bounce TV Network and other companies.
Our platform features best-in-class online banking services and innovative ways of giving back to Black and Latinx causes and businesses. We have partnered with minority-owned banks and other FDIC-insured banks to give customers the ability to spend and save securely and affordably.
Our initial products are savings and spending accounts with advanced features like Apple, Samsung, and Android Pay, virtual debit cards, peer-to-peer transfers, mobile check deposits, and free ATM usage in over 30,000 locations with no hidden fees. We have also partnered with the NAACP to support civil rights and UNCF to support minority education.
In celebration of the 500,000 sign-ups milestone, we have announced a donation to the Drum Major Institute, an organization co-founded by Rev. Dr. Martin Luther King, Jr. and dedicated to creating commonsense solutions to drive social progress for all American citizens. A contribution also will be presented to the Martin Luther King, Jr. Center for Nonviolent Social Change, an organization founded by Mrs. Coretta Scott King as the official living memorial of the life, work, and legacy of Dr. King.
The King Center will join other notable organizations as part of our Greenwood Give Back Program. Customers can round up their purchases to the nearest dollar and send the proceeds to worthy causes. To read more about our Give Back Program, click here.