Not a Charity: How First Boulevard and Greenwood Neobanks Tackle Wealth Bias
Affinity neobanks targeting underserved communities have emerged in recent years amid a wider array of digital banking startups vying for consumers who have historically done business with traditional institutions, or have been left out of the banking system altogether.
But as these startups look to increase their investments, one problem some say they often run into is wealth bias.
âWhen we go out pitching, every time we say, ‘This is a new bank for black America,’ people start telling me about different charitable foundations that I should go to asking for money,â said Asya Bradley, Chief Operating Officer of First Boulevard. , who co-founded the neobank with CEO Donald Hawkins in August 2020. âWhy do you all think this is a charity? It’s a bank. We’re here to empower black America, but why do you suppose that means we’re helping the poor? “
Bradley, who spoke this week at a panel at the Money20 / 20 conference, said the wealth bias is also present when some investors consider the needs of women.
It is assumed that women are “risk averse” and “don’t know how to invest,” she said.
“So you’re going to have to educate them, right? Your products may be just about education because women don’t have the money,” Bradley said, highlighting some of the comments she has. often received from investors.
âWealth bias is this assumption that whoever we help will be poor,â she said.
Bradley noted the New York Times Report 2019 detailing racial discrimination involving former NFL player Jimmy Kennedy, who was denied private client status by JPMorgan Chase despite transferring $ 800,000 to the bank.
Kennedy, who is black, was promised “private client” status, reserved for accounts over $ 250,000, but was refused because of his skin color, audio recordings viewed by The Times show. .
The incident has gained national attention and lawmakers have asked the bank to provide information regarding the allegations. In a 12-page letter to lawmakers, the bank recognized several shortcomings and told employees in an internal memo that he was creating a team to drive improvements on discrimination.
âWith the wealth bias, no matter how much money you have as a black person, you are always going to be dealing with racist people,â Bradley said.
First Boulevard, which raised $ 5 million in seed funding in March, has a waiting list of 100,000, according to TechCrunch.
Build generational wealth
Like First Boulevard, Atlanta-based digital bank Greenwood is on a mission to help underserved communities build generational wealth.
Rapper and activist Michael “Killer Mike” Render, one of the founders of the startup that aims to serve black and Latin communities, said it’s not just those at the bottom of the economic ladder who are facing discrimination in financial services.
âI’m a businessman. I had millions of dollars in one of the biggest banks and when I went to tell them, ‘I want to buy real estate, I have great credit’, they were like, “We can’t give you the loan, Michael,” “Render told Money 20/20 conference attendees at a separate roundtable. “I was like, ‘Well, I’m taking my money out of your fucking bank.'”
Render said the bank, whose response was to trick him into putting his funds into an investment account, ultimately granted him the loan.
âAlthough I found it disturbing and was a little insulted by it, I understood how difficult it must be for working-class Michael to apply for a car loan,â Render said. “I understood how difficult it must be to be refused a mortgage when you pay rent faithfully for five, 10 or 15 years sometimes. You finally get to be able to do it, and then your bank tells you no. “
During the discussion, Render shared tips on how members of the public can support the black community with their portfolios, reiterating Bradley’s sentiment that the startup is not looking for documents.
âI don’t need charity. I need you to actively put your dollar into my community so that we can move it around and improve the economy as a whole,â he said, encouraging attendees. to commit to buying at least from one black-owned business. once a week. “If the black community is better, the whole community is better.”
Greenwood was formed in October 2020 by Render, civil rights leader Andrew Young and Atlanta-based entrepreneur and Bounce TV founder Ryan Glover.
The platform, which is in beta with 200 users, has more than 600,000 on its waiting list, said the neobank.