As Black-owned banks receive new capital investments following a nationwide movement to invest in Black-owned businesses, $1.5 billion could be reinvested back into minority communities.
According to the National Bankers Association, approximately $150 million in equity capital has been invested into Black-owned banks since Black Lives Matter protests, prompted by George Floyd's murder, broke out last year. The National Bankers Association (NBA) is a trade group established to represent 24 minority-owned financial institutions in the United States. Chairman Robert E. James II explained that the investments have helped put the country's Black banking community in a stronger position than it was even just a year ago. He believes that the investments could lead to a total of $1.5 billion being leveraged to serve minority communities, CNN reports.
An estimated $150 million in equity capital has been invested in Black-owned banks since George Floyd was murdered last year, according to the National Bankers Association https://t.co/pDbcudK0Up— CNN Business (@CNNBusiness) June 9, 2021
The movement to support more Black-owned businesses at large, including Black-owned banks, began in the summer of 2020 following Floyd's murder by White police officer Derek Chauvin. Dozens of corporate leaders, as well as everyday Americans, stressed the importance of actionable means through which longstanding socioeconomic disparities between Black and White America could be addressed. As a result, business was booming for Black-owned firms and banks. As per records of the Federal Deposit Insurance Corporation (FDIC), the nation's 142 total minority-owned depository institutions (MDIs) saw a boost of more than 15 percent in their combined assets last year.
Tune in at 12:55 pm CST for the #BlackWallStreet Partners in Policy seminar to hear our Chairman Robert James II discuss the policy implications of diversity and inclusion at the local and federal levels. https://t.co/vZMkIDY1Zh— National Bankers Association (@NatBankers1927) June 1, 2021
At the end of 2019, MDIs recorded $248.6 billion in combined assets. A year later, at the end of 2020, this had risen to more than $287 billion. While these banks are only a small slice of the country's banking system (valued at $21 trillion), they have a significant role to play in serving communities dominated by Black and Brown Americans. The new investments will only help boost their outreach efforts. In this context, minority banking leaders have spent the last year deciding how to invest the new capital they have received. Thankfully, most banks have chosen, quite intentionally, to put the funds towards programs that will bridge racial gaps in banking.
If Not Now, When? Building Wealth In The Post-Pandemic Economy https://t.co/N7HzXqDbGf— Black Enterprise (@blackenterprise) June 8, 2021
For instance, OneUnited Bank opened new customer service facilities in Miami and Los Angeles. In addition to this, the bank will host a free virtual conference promoting financial literacy beginning on June 19. This conference aligns with their One Transaction program, an initiative intended to close the wealth disparity in the United States through teaching participants six key ways to build generational wealth. These include, among other methods, maximizing savings and investments; owning a home; having a will; and owning a profitable business. The program will also stress the importance of using the internet to grow one's business.
This is particularly important as Black entrepreneurs own a disproportionate number of brick-and-mortar small businesses, which were hit harder than online-only businesses. OneUnited CEO Kevin Cohee shared, "The internet is the new real estate. Just like ownership of real property was the major builder of wealth up until this time, now that's switching to the internet. It's the biggest opportunity to get wealthy that there's ever been." Since last year, the bank has added over 100,000 customers and its revenue has grown by 150 percent. The CEO stated, "We have over twice as many customers as any other minority depository institution."
OneUnited, through its newly-launched programs, is setting an example for other MDIs. It is also ensuring that the NBA meets its goals of helping members access equity capital, increase their service capacity, and leverage financial technology (known as fintech) to achieve an "economic multiplier effect" for Black and Brown Americans. Chairman James affirmed, "We also look forward to engaging new generations in conversation about how they can use their money to help foster the social change they seek." Meanwhile, on-ground, banks are also focusing on retaining customer trust. "We need lasting relationships to build capital and get revenue opportunities," the NBA's newest President and CEO, Nicole Elam, said. "Our members must be able to go back to their customer base and tell them they won't suffer by bringing their accounts to Black-owned banks and MDIs."