PressForm, November 17, Fintech works to elevate minority leaders as users diversify
Data is beginning to show that communities historically cut off from banking and investing are using financial technology to increase access.
Mae Watson Grote, Change Machine’s founder and CEO, appeared virtually at DC Fintech Week last month, presenting her paper that cited banking regulators and a 2016 study by the National Community Reinvestment Coalition, or NCRC, that investigated lasting impacts from a legacy of discrimination and deprived access.
The 2016 study looked at mortgage lending patterns in St. Louis, Milwaukee and Minneapolis and observed compounding effects of systemic discrimination in banking and finance. It documented zones of largely unbanked and underbanked populations coupled with low rates of mortgage originations that were correlated with predominantly Black neighborhoods.
Redlining, the practice of banks closing off access to financial services in certain neighborhoods because of the racial makeup, persisted both legally and unofficially for decades in the U.S. and forced many minority Americans into costly credit options such as short-term payday loans.
“Isolation from financial services impacts the ability of majority African American neighborhoods to build wealth, concentrating poverty,” the NCRC study said. “This perpetuates a cycle of disinvestment, reinforcing the likelihood that lenders will not invest there.”
