Building on Black America’s Legacy of Resilience: A FinTech Blueprint
Black America is positioned to capitalize on current wealth trends during a pivotal economic time in our nation’s history. Black America is influencing how technology is used globally and is a key contributor to a FinTech plan that offers a path to financial stability, security and opportunity. This plan can be used to address historical disadvantage, even with the current state of the economy and its impact on minority communities.
Despite the call for greater diversity and inclusion in all aspects of life and business, black adults remain underserved by the banking industry—a significant barrier to upward mobility, such as home ownership, business finance, and more. Being financially underserved by traditional financial institutions has roots in American history and policies whose effects continue today (eg redlining of communities resulting in banking deserts).
Recent blows to the economic health of black Americans, such as the 2008 mortgage crisis, affected black home ownership and wealth, as well as black businesses that closed and never reopened. In 2020, the COVID-19 pandemic exposed additional vulnerabilities in banking and accounting relationships that were critical for black-owned businesses to obtain loans through the Paycheck Protection program to help businesses keep their workforces employed during the crisis.
However, the black community is resilient and has relied on institutions such as black-owned banks, historically black colleges and universities (HBCUs), black churches, and black sororities and fraternities for financial, civic, spiritual, political, and educational support. Today’s generation can make further progress by modernizing these institutions with new financial and technological architecture and strategies. There is an opportunity to harness the power of FinTech to sustain and grow these institutions that have supported Black Americans for hundreds of years.
Now is the time to bridge the gap between technology and the preferences of black adults to transform these institutions into engines of economic and financial mobility. Previous generations envisioned and implemented the Underground Railroad to serve as a network of freedom for slaves. Two hundred years later, can today’s generation envision a technological railroad that unlocks economic freedom and closes the wealth gap?
According to the Pew Research Center, black adults are at the forefront of digital adoption, are more likely to invest in Bitcoin and crypto services, and are twice as likely to use financial technologies such as Cash App, Venmo, Coinbase and Robinhood.
It is important to move beyond usage and focus on potential partnerships that can expand opportunities to innovate and develop products and services that promote equity ownership with institutions that are trusted by black communities.
A comprehensive FinTech plan should include digital lending, payments, investment, savings, wealth management and financial education. These services have historically not been available to everyone. Many low-income earners are unable to harness the power of leverage by being denied loan products on lending platforms. Many older adults struggle with using mobile phones and computers and are wary of fraud. There is also the issue of the digital divide, as 22 percent of black Americans nationwide are without Internet access at home, including 40 percent of rural black Americans. If America is ever to achieve tangible change in economic access, systemic innovation is a necessary part of the process.
Institutions in Black communities can help promote broader access to financial tools and services by contributing their unique blend of leadership, relationships and community buy-in. To ensure full representation, each institution should have a FinTech committee that includes STEM and financial experts and professionals in ethics and entrepreneurship. A committee of this composition will enable the success of strategic partnerships with FinTech companies to reach and serve the underbanked, underserved and underappreciated.
Every institution has a role to play. Black-owned banks and minority depository institutions can take the lead in identifying financial services and strategies for individuals through partnerships with HBCUs, Black churches, and Black sororities and fraternities. HBCUs are positioned to lead in delivering FinTech education and preparing the next generation of leaders. Black churches can help implement community-based financial education, fluid initiatives and technology for community development companies under their leadership. Black sororities and fraternities have a deep bench of leaders, experts and professionals, and an engaged community that can fuel the talent and leadership pipeline.
Economic inclusion and justice were the focus of the late congressman and civil rights icon John Lewis last year. Black America has the capacity, the acumen and the opportunity to pick up the baton and run the race on the technology railroad.
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