Different demographic groups in the United States use banks in different ways. White Americans are far more likely to have a bank account and use banking services. Black, Indigenous and people of color, by contrast, are more likely to be unbanked or underbanked. A century ago, that was by design, but with the passage of anti-discrimination and anti-redlining laws in the 1960s and 1970s, nonwhite Americans have gradually been increasing their access to the financial mainstream. But there's one group that has been harder to reach than any other: Indigenous communities, and particularly Indigenous communities living on tribal reservations. According to the Federal Deposit Insurance Corp., more than 16% of people who identified as American Indian/Alaska Native were unbanked in 2019 — no checking or savings accounts, no bank loans. That percentage might not sound like a lot, but, for comparison, less than 2.5% of white people were unbanked in the same period. That makes Indigenous Americans the most unbanked demographic group the FDIC tracks. Some banks have managed to navigate these systems already. Native American Bank in Denver began in Montana in 1987 as Blackfeet National Bank, the first bank ever chartered by Indigenous peoples on a reservation. Today the $201 million-asset bank is partially owned by several tribal nations all over the country and has financed projects across 25 states. Tom Ogaard, president and CEO of Native American Bank, said success begins with familiarity.
Remitly, a Seattle-based firm that provides international remittances and digital financial services for immigrants, has added new banking features in its money management app Passbook. Launched early last year, Passbook aims to simplify the process of opening and using a bank account for immigrants in the U.S. by eliminating banking fees, accepting alternative forms of identification, and facilitating international money transfers. The digital banking services on the Passbook app are offered through a bank account issued by Sunrise Banks, a Certified B Corp and partner bank with experience working for immigrant communities through initiatives such as the Open Door Mortgage Program. The bank has previously issued prepaid debit cards for AT&T Small Business, Boost Mobile, and Relay.
While they aren't synonymous—although there is some overlap between the two categories—community development financial institutions and minority depository institutions have common roots in a shared historical purpose. “The roots of the CDFI banking sector began with the minority depository institutions,” says Jeannine Jacokes, chief executive of the Community Development Bankers Association. “In the early 20th century, when it was legal to refuse service to a customer on the basis of race, Black business people began organizing financial institutions that were Black-owned and committed to serving Black customers—and as populations of other communities of color grew, the diversity of the minority depository institutions grew as well.” Southern Bancorp and Bank of Anguilla are mentioned.
Southern Bancorp, a community development financial institution in Arkadelphia, Arkansas, is using an infusion of cash from Square to develop niche digital banking services for segments of its customer base. Square made a multimillion-dollar investment in Southern as part of a larger $100 million pledge to support minority and underserved communities, the bank announced this month. With this funding, Southern intends to create customized apps, each designed to address a specific situation for a well-defined underserved group. “We think the true growth opportunity for our bank is digital,” said Darrin Williams, Southern's CEO. “We’re very excited Square took note of the work we do. That capital will allow us to reach deeper into underserved markets.”
Casey Christopher is a "CEO," but not the one you're familiar with. As "chief empowerment officer" at Manhattan-based Quontic Bank, she has a unique role in catalyzing innovation from the bottom up. As a community development financial institution, Quontic also has an express mission of reaching underserved market segments—for example, constructing credit products that work well for gig economy workers and immigrants whose finances may not fit standard underwriting models. This kind of financial empowerment translates into employee empowerment too—it calls on a whole team to feel ownership and empowered to introduce new ideas. That’s where Christopher comes in. Christopher leads empowerment through Quontic Bank’s core values: “say cheese” (smile and be positive); “try it on” (be adaptive and open to new ideas), “know the goal” and “progress, not perfection.”