A 2019 Federal Reserve survey highlighted this disparity, revealing that the average white family holds eight times more wealth than the typical Black family. This gap is attributed mainly to slavery, historical U.S. policies, and discriminatory lending practices that excluded Black Americans from crucial financial services and credit opportunities to purchase assets. Black-owned banks and credit unions play a pivotal role in serving the Black American community, serving as economic incubators by employing and serving the local community.
Most Black-owned banks are community development financial institutions (CDFIs). These banks focus on providing financial services in areas often underserved and characterized by low to moderate income. They are dedicated to offering banking services to those previously denied such opportunities, and they actively support Black-owned small businesses and homeowners, who face higher rates of loan denial than their white counterparts.
For those unfamiliar with the difference between banks and credit unions, a bank is a for-profit institution. Credit unions are primarily not-for-profit institutions. They might have specific membership criteria, often based on geographic location or association with certain groups, like employees of historically Black colleges or predominantly Black churches.
In reviewing the landscape of Black-owned banks and credit unions, some interesting trends emerge, offering insights into their distribution and presence across the United States.
A standout observation is the state-wise distribution of these financial institutions. Among the states, Georgia and Louisiana notably lead in the number of Black-owned banks and credit unions. This presence reflects the significant African American populations in these regions and their historical and ongoing economic influence.
Another trend to note is the concentration of these institutions in the Southern United States. This is likely due to the historical and cultural ties within these states, where the African American community has deep roots. These banks and credit unions serve as financial institutions and pillars of community development and economic empowerment.
In addition to traditional brick-and-mortar banks, there's a rising trend in online-only Black-owned banking platforms like Greenwood and MoCaFi. These platforms are expanding the reach of Black-owned financial services, making them accessible nationwide, especially in areas where physical branches might not be present.
It's important to highlight the mission-driven aspect of these institutions. Whether they are based in states with a high concentration of Black-owned banks or operate online, their commitment remains steadfast in serving historically underserved communities and addressing the wealth gap.
Why You Should Bank Black
In the realm of banking and financial inclusion, the importance of supporting Black-owned banks has never been more evident. A striking example of this need is a recent study revealing that Navy Federal Credit Union denied loans to 50% of its Black applicants. Such startling disparities in lending practices highlight systemic issues within the banking industry and reinforce the critical role Black-owned banks play in providing equitable financial services. These institutions are not just banks; they represent a movement toward closing the racial wealth gap and ensuring fair access to financial resources for all, especially the historically underserved Black community.
Joining a Black-owned bank or credit union is a tangible way to support their mission of fostering economic growth and closing the wealth gap in Black communities by circulating our dollars. Kevin Cohee, CEO of OneUnited Bank, one of the largest Black-owned banks in the U.S., encapsulates this mission: "We're making Black America a better place, and by doing so, making all America a better place." We encourage readers to look at this list to find their local black owned banks or credit unions and open an account or certificate of deposit with the institution. The money that you put on deposit at this bank could create an opportunity for ownership for a qualified homeowner who may have gotten denied due to discriminatory practices.
The list of Black-owned financial institutions in the U.S. is extensive, ranging from Alamerica Bank in Alabama to Columbia Savings and Loan Association in Wisconsin. This list also includes a few online-only platforms like Greenwood and MoCaFi, which collaborate with banks to provide services nationwide. It's important to note that while this list is comprehensive, it might be partial due to varying recognition processes for banks and credit unions. For the most up-to-date information, you can refer to the Federal Deposit Insurance Corporation for banks and the National Credit Union Administration for credit unions.
