BankTech

[Opinion] The rise of new banks serving Black and Latinx communities

Traditional banks should be questioning what they can do better

Over the past week, I have heard about several new banks that cater to specific demographics: the Black and Latinx community. 

First up is Greenwood which secured $3 million in seed funding from private investors to build what it describes as “the first digital banking platform for Black and Latinx people and business owners.” 

Greenwood’s founders include: 

  • Andrew J. Young, civil rights legend, former U.S. Ambassador to the United Nations, and former Mayor of Atlanta
  • Michael Render, aka Killer Mike, rapper and activist in Black financial empowerment
  • Ryan Glover, Greenwood Chairman and founder of Bounce TV network

Clearly an impressive group.

Greenwood

In a statement, Glover said “it’s no secret that traditional banks have failed the Black and Latinx community.”

He added: “We needed to create a new financial platform that understands our history and our needs going forward, a banking platform built by us and for us, a platform that helps us build a stronger future for our communities. This is our time to take back control of our lives and our financial future. That is why we launched Greenwood, modern banking for the culture.” 

Greenwood said it also plans to work with brick and mortar minority-owned banks to provide deposits to help strengthen historically black financial institutions.

“The work that we did in the civil rights movement wasn’t just about being able to sit at the counter. It was also about being able to own the restaurant,” said Ambassador Andrew Young. 

According to CNN, the bank received “tens of thousands” of account requests in less than 24 hours.

Viva First

Also last week, Lubbock, Texas-based startup Viva First announced the launch of a new mobile bank “with the Latino community in mind.” In announcing the new bank, the company said: “While so many banks and fintech companies take a broad approach when catering to multiple demographics, the company sees a real opportunity to bank this underserved market.”

Viva First Chief Evangelist, Natalia Muñoz-Moore noted that the Latino community has “largely been banked in the wrong way with misguided practices.”

Viva First’s goal is to provide a banking solution that “truly speaks their language and gives them every account feature they could ever expect,” she added. 

“We’re talking about a very influential demographic that deserves real attention. And we’ve tailored a financial relationship just for them,” Muñoz-Moore said.

And more

I also learned this week of another new bank serving the Black community – Tenth, which was founded by Asya Bradley, former CRO at Synapse. On its website, Tenth says: “In capitalism, money is power and understanding how money works is what we’re all about – specifically for African Americans.”

Also, OneUnited Bank, which describes itself as the largest Black-owned bank in the country, announced this week it achieved a milestone of over 100,000 customers. The bank credited its social justice activism and technology platform for its growth, which proves the demand is there.

Context

At first, I was saddened (although not surprised) by the fact that it was clear that these founders’ needs weren’t being met by existing banks and that they felt the need to start their own banks to serve their communities. 

But therein also lies the good news.

These members of the Black and Latinx community felt compelled to start their own banks and then actually took it a step further and acted on it.

The United States is a true melting pot. The beauty of that is the diversity found in our streets, and in our financial institutions. 

I applaud the efforts of the founders of these new banks, without question. 

And subsequently, I pose these questions to other existing financial institutions: 

  1. What can you do better to make members of these communities, as well as other demographics, feel more valuable?
  2. What more can you do to make them feel their needs are being listened to, heard and met? 
  3. How can you do a better job of serving all communities and demographics so that everyone feels included, acknowledged and appreciated as customers?
  4. How well do you understand the needs of your customers, beyond the features of your products?  

I think the most important thing to remember here is that members of these demographics – while they surely celebrate what sets them apart – also want to be seen no differently than their white counterparts in the eyes of the financial institutions serving them. 

That’s not too much to ask.

This column does not necessarily reflect the opinion of FinLedger’s editorial department and its owners.

To contact the author of this story:
Mary Ann Azevedo at maryann@finledger.com

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