Big banks want Black communities to trust them
As an 18-year-old college student working parttime, Lakiarra Lofton, now 30, mismanaged her checking account. When the fees became too much, she ended up walking away from that account. She has spent most of her adult life using check-cashing services, prepaid debit cards and, most recently, fee-free mobile banking.
Sylvia Adetona has deposited checks at the same financial institution for more than 25 years. That doesn't mean she trusts banks.
Over the decades, the 68-year-old South Los Angeles resident has seen the unequal treatment banks gave communities of color and low-income customers. In the leadup to the Great Recession, banks issued a disproportionate number of subprime mortgage loans to Black and Latino borrowers.
Adetona remembers the for-sale signs dotting her neighborhood - those families lost their homes when they couldn't afford to make their mortgage payments, yet many of the banks were bailed out. Someone she knew had a decent credit score but was still denied a loan. Bank branches shut in her neighborhood, forcing her and others to travel farther when they want to interact with tellers.
"I wouldn't say I have an absolute great relationship with the bank," Adetona said. Communities of color have many reasons to distrust large national banks. In some cases, the wariness stems from racist practices in the financial system, such as redlining, or from past bank failures. In others, it arose from a lack of transparency about fees or a feeling that national banks want only certain kinds of customers.
Some people have embraced alternatives to America's big financial institutions, turning toward Black-owned banks, payday lenders, credit unions and cash-only solutions. "There has been systemic financial exclusion of certain demographics," said Charles Danso, an assistant professor of finance at Cal State L.A. To truly serve those communities, banks need to "put some thought into generating financial products that will meet the needs" of these individuals.
Jorge Rios, photographed in Vienna, created an App called Bridgefy that allows people to send messages to each other without an Internet connection or SMS, but most venture capitalists didn't want to fund him.
After the murder of George Floyd and the subsequent uprisings for racial equity, national banks - like many other large corporate institutions - pledged to help reduce the racial wealth gap by investing in Black and Latino communities.