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 country’s history. Black America influences how technology is used globally and is a key contributor to a FinTech blueprint that offers a pathway to financial stability, security, and opportunity. This blueprint can be used to address historical disadvantages, 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 funding, and more. Being financially underserved by traditional financial institutions has roots in American history and policies whose effects continue today (e.g., redlining communities resulting in banking deserts).
Recent blows to the financial health of Black Americans, like the 2008 mortgage crisis, impacted Black homeownership and wealth, as well as Black businesses that closed and never reopened. In 2020, the COVID-19 pandemic further revealed vulnerabilities in banking and accounting relationships that were essential for Black-owned businesses to obtain loans via the Paycheck Protection Program to help businesses keep their workforce employed during the crisis.
However, the Black community is resilient and has relied on institutions like 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 strides by modernizing these institutions with new financial and technological architecture and strategies. There is an opportunity to leverage 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 technology and the preferences of Black adults to transform these institutions into engines of economic and financial mobility. Past generations imagined and implemented the Underground Railroad to serve as a network of freedom for enslaved people. Two hundred years later, can today’s generation envision a technology railroad that unlocks financial freedom and closes the wealth divide?
According to 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 like Cash App, Venmo, Coinbase, and Robinhood.
It is vital to go 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 have the trust of Black communities.
A comprehensive FinTech blueprint should encompass digital lending, payments, investing, saving, wealth management, and financial education. These services have, historically, not been accessible to all. Many low-income earners are unable to capitalize on the power of leverage by being denied loan products on lending platforms. Many older adults struggle with the use of cell phones and computers and are wary of scams. There is also the issue of the digital divide, as 22 percent of Black Americans across the country are without internet access at home, including 40 percent of Black Americans in rural areas. If America is ever to achieve tangible change in financial access, then systemic innovation is a necessary part of the process.
Institutions in Black communities can help advance 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 makeup will enable the success of strategic partnerships with FinTech companies to reach and serve the underbanked, undervalued, and underestimated.
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, fluency initiatives, and tech for community development corporations under their leadership. Black sororities and fraternities have a deep bench of leaders, experts, and professionals, and a committed 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 years. Black America has the capacity, acumen, and opportunity to pick up the baton and run the race on the technology railroad.