Large U.S. banks have had diversity officers and teams in place for years, according to Naomi Mercer, SVP diversity, equity and inclusion at ABA. But Floyd's death and the events that unfolded after have created "more of an empathy shock" for many bankers, who might not have realized how deep racial disparities are. As a result, more community and regional banks have been adding diversity officer positions, often housed within human resources, to help support the bank in broadening their employee base to reflect the full communities they serve. Increasingly, established banks are not only embracing social justice interests, but they are being launched with that as a foundation to their mission. Case in point: Beneficial State Bank was founded in Oakland, California, in 2008 with the express undertaking of investing in under-served communities, according to Francis Janes, industry relations and partnership director for the Beneficial State Bank’s foundation.
The price of a single Bitcoin may be around half of what it was just a few months ago, but that doesn't mean crypto has run its course. The reality is, cryptocurrency has always been volatile in general, and Bitcoin has still shown an upward trend since inception, albeit with plenty of bumps along the road. Over the last few years, an array of banks and financial institutions have created new ways for Bitcoin enthusiasts to get into the game via bank deposits and even credit card spending. One new choice in the debit space is Quontic Bank’s Bitcoin Rewards Checking, which offers 1.5% back in Bitcoin on eligible purchases.
For 24 years, Ericka Gray has owned her own mediation and arbitration business in Arlington, Massachusetts, helping organizations navigate workplace disputes. But when the Covid-19 pandemic began, her income completely dried up. In May 2020, Citizens Bank approved her for a $5,800 PPP loan. It wasn’t a huge sum compared the multimillion-dollar loans some corporations received, but Gray had enough income to pay her mortgage and cover her health care costs. But in May 2021, Gray received a shocking email from Citizens explaining that no, she shouldn’t have received $5,800. Instead, a bank representative later told her on the phone, she was in fact only eligible for $3,837. The difference won’t be forgiven, and she’ll have to pay it back. Citizens did not respond to a request for comment. Gray is not the only person whose bank has reversed its stance on how much PPP money they should be eligible for and demanded repayment. Three other small business owners told The Intercept they have similarly been notified by their different lenders that they shouldn’t have received the amount they were approved for and that they’ll have to pay back the difference.
President Biden wants banks to make customer data portable. The directive can be interpreted in many different ways and may prove easier said than done. The White House, as part of a broad executive order meant to promote competition across the U.S. economy, says it "encourages the Consumer Financial Protection Bureau to issue rules allowing customers to download their banking data and take it with them." The administration wants to "make it easier and cheaper" for consumers to take their business to rivals. How much of an effort this will require banks to make from a technology and business point of view will depend on the rules the CFPB writes. The agency could validate the current state of consumer data sharing in the U.S., in which aggregators pull data out of banks and give it to fintechs on behalf of consumers. Or it could require something new — actually letting consumers download their own data in a usable format onto a device or into an online storage account, or allowing customers to have their data sent from one bank to another.
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.
For those preparing to apply for the FY 2021 application round, the Community Development Financial Institutions Fund (CDFI Fund) conducted an informational pre-application webinar on June 30, 2021 for the Capital Magnet Fund. The presentation and a recording of the session are available on the CDFI Fund's website at www.cdfifund.gov/cmf under How to Apply Step 2: Apply.
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.
Certified by the U.S. Department of Treasury, nearly 1,300 CDFIs serve persistently impoverished communities and historically underserved populations with responsible financial services and technical assistance. The pandemic illustrated the financial services ecosystem's failure to serve poor, disabled, and BIPOC people and communities; yet CDFIs filled the gap and succeeded in serving these overlooked and financially vulnerable populations. To motivate others to invest, we highlight three CDFI investors. One investor couple is laser-focused on their home community of Lancaster; another investor has spent her professional and volunteer energies at the intersection of philanthropy and impact, and the third is an international venture capitalist who returned to the US and found CDFI investments to be “no-brainers.”
For people who need emergency money quickly, payday lenders have long been among the few available options. They are ubiquitous in the U.S., with an estimated 13,700 storefronts in 2018, many in low-income and Black communities. Although 18 states and Washington, D.C., have strong interest rate caps on payday lending, in others some lenders charge annual interest rates that surpass 600 percent. But in the wake of the COVID-19 pandemic and the inequalities it exposed and exacerbated, there is a renewed focus on the need to counter payday lenders by bringing better, fairer banking services—personal loans, but also mortgages and small business loans—to the primarily low-income people who have long had difficulty accessing them. The federal government as well as corporations and at least one bold name philanthropist are injecting money into Community Development Financial Institutions (CDFIs), financial service providers whose mission is to bring financial services to low-income communities and people within rural, urban, and Native communities—the places many traditional banks have largely excluded. The game-changing infusion amounts to billions of dollars’ worth of investment.
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.”