For African Americans, the introduction of mobile banking means not only better access to financial institutions, but also the ability to choose a bank that matches their values.
According to a report from the Federal Deposit Insurance Corp. As of 2016, just over 18% of black households in the US are without a bank account, compared to 3% of white households and 7% of all households able to connect to a bank where it was previously difficult.
Black Americans have historically been excluded from many financial services through legal segregation. Today, other forms of discrimination can discourage enthusiasm for banking. For example, the Consumer Financial Protection Bureau has fined several banks since 2013 Redliningor credit overload due to the race of customers.
According to the FDIC report, which found that nearly 24% of blacks surveyed said banks were “not at all interested” in serving households like theirs, African Americans continued to distrust banks, compared with around 16% of all respondents and nearly 13% of white respondents.
Mobile banking trends on the rise
According to the FDIC, more and more blacks are joining the ranks of full banks, with the percentage rising from 40% to 45.5% from 2013 to 2015. This increase coincided with the significant use of mobile banking among black Americans.
Data shows that African Americans adopted mobile banking faster than whites. According to a 2015 Federal Reserve Board survey, about 50% of black respondents said they’d used mobile banking in the past year, compared with 37% of white respondents. About 11% of African Americans use mobile banking as their primary banking method, compared with 9.5% for all respondents, according to the FDIC report.
While this likely correlates with the need – 15% of blacks have a smartphone but no broadband access at home, compared to 9% of whites, the impartial Pew Research Center found – suggesting the need and willingness to otherwise use it bank.
In some cases, mobile and online banking allows people to choose a financial institution that supports causes that are important to them, even if there is no branch near their home.
Choosing a bank that will help the community
Tami Sawyer opened an online checking account with the black-owned OneUnited Bank about a year ago, which was attracted to the institution for its commitment to helping black communities economically. OneUnited offers financial literacy workshops and supports the #BankBlack movement, a campaign launched by rapper killer Mike in 2016 to encourage people to open accounts with black-owned banks. The idea is that black banks, in turn, could reinvest their money in their communities by lending to business owners and providing affordable home loans.
Sawyer, director of diversity and cultural literacy at Teach for America – an organization that connects college graduates with teaching assignments in underserved schools – lives in Memphis, Tennessee. OneUnited has offices in California, Massachusetts, and Florida – but Sawyer doesn’t care.
While the bank’s support for black communities was a key factor in their decision, technology also played a key role. She picked OneUnited through a local black-owned bank because OneUnited had an iPhone app. The other didn’t.
“I do everything with them on my phone,” says Sawyer. “That was the final selling point.”