Martin Luther King Jr. told the audience to move their money from downtown banks to TriState – a Black owned bank in Memphis – during his famous “Mountaintop” speech in 1968. Black owned banks were created both prior to and during the Civil Rights Movement when traditional banks were not allowing Black people to open accounts. Although the country is now more integrated and Black people can do business with any bank they choose, it is more important than ever to use Black owned banks to help accelerate the economic revitalization of distressed communities.
Today, African Americans make up 13.2% of the U.S. population, yet there are only 21 banks owned by African Americans (out of nearly 6,000 total banks or 0.4%). The Black community continues to experience a dearth of mainstream financial services options. Over 30% of African Americans live without a bank account or are considered underbanked – meaning they have to supplement their financial services with banking alternatives like check cashing services.
Access to Financial Services
African Americans without bank accounts are disconnected from the financial services they so desperately need to move ahead, including attaining mortgages and business loans. All too often, Black people experience job loss or financial loss and are turned down by mainstream banks when they apply for loans or mortgages. Even when their credentials are comparable to individuals who are approved for loans or mortgages, studies have shown that African Americans do not receive comparable rates and services. By contrast, Black owned banks offer competitive rates and services. In the event a Black owned bank is unable to provide a loan, they offer other financial products to help rebuild credit such as a secured credit card or a second-chance checking account for those who have been denied a bank account because of a ChexSystems record.
Strengthening the Community
Black owned banks are typically located within urban and Black communities. They are more likely to lend money to Black people. They are more likely to support and lend money to help start Black owned businesses. They are also more likely to employ Black people. Supporting Black owned banks by opening a savings account, applying for a loan, getting a single family mortgage, and enjoying the conveniences of online banking all serve to keep people employed in urban communities while also supporting options that better serve the needs of the Black community.
When Black people circulate more of their money within Black communities – as other ethnic groups currently do – it helps support and build the community. Right now, Black people spend a fraction (2-3%) of their dollars with local Black owned businesses and purchase the lion’s share of their goods and services (97-98%) elsewhere. Keeping more money in the Black community will go a long way to create wealth and open the door to greater opportunities in areas that are financially distressed.
As an example, OneUnited Bank, the largest Black-owned bank in America, serves everyone and needs everyone’s support, regardless of race, religion, ethnicity, gender, sexual orientation, etc. Yet OneUnited Bank seeks to overcome the historical challenges that the Black community has faced with financial institutions including redlining, subprime loans, foreclosures and other predatory practices. OneUnited has never engaged in these practices. Instead, it supports community development with home loans, multifamily and commercial real estate loans, a secured credit card to rebuild credit, free financial literacy, free meeting space for non-profits, and affordable banking services that promote saving for the future.
Changing the Mindset
We can take steps to strengthen and build the community by changing our mindset – and this includes more economic engagement. If millions of people opened an account with an FDIC-insured Black owned institution like OneUnited Bank or did more business with Black owned businesses, it would help to grow the wealth of Black communities. Start by joining the #BankBlack movement and make a difference today!
