For some, the fight for social equality is moving to a new battleground: the banking sector.
In the midst of a national debate about how to address police brutality and economic inequality, a quiet shift has taken place. Participants in a nationwide movement to deploy African-American spending power in a more targeted fashion have funneled deposits into black-owned banks across the country. Dubbed the “Bank Black” campaign, proponents have called for using black wealth to create positive change in an increasingly fractured society.
“There is an awakening for the black community to utilize our $1.2 trillion in annual spending power to create jobs and build wealth in our community,” Teri Williams, president and COO of One United Bank, told CNBC in a recent interview. One United has the dual distinction of being both the largest black-owned bank, and the first black internet bank in the country.
The number of banks catering to African-American clientele has declined in recent years, down from 48 in 2001 to 23 out of the more than 6,000 FDIC-insured banks in the U.S. Boston-based One United uses a mix of technology and customer service to attract customers to its web banking services, as well as its nine branches located in California, Florida and Massachusetts.
“We know the importance of online and mobile banking include the expectations that millennials and beyond expect from their banks,” Williams said. Dismissing the idea that institutions owned by people of color are less established or inherently risky, Williams told CNBC that “there is no risk to banking black.”
Overall, some 156 U.S.-based minority-owned banks collectively hold $131 billion in assets, according to FDIC data, with black-owned banks holding approximately $4.7 billion in assets. However, those figures pale in comparison with the leading commercial banking giants like JPMorgan Chase, which holds more than $2 trillion.
The black banking movement is the latest incarnation of a call to economic activism that spans nearly 100 years. In the early 20th century, black intellectual W.E.B. Du Bois issued a call for voluntary financial cooperation among blacks oppressed by racism and segregation, echoed in 1966 by the A. Philip Randolph Institute’s”Freedom Budget for All Americans” designed to stamp out poverty in America.
In the context of wealth, there is a persistent disparity between what black families earn when compared to other ethnicities. According to figures from the Urban Institute, the average wealth gap between white and nonwhite families exploded between 1963 and 2013 from $117,000 to more than $500,000. Separately, a recent study from the Pew Research Center found that college-educated blacks earned more than $20,000 less than their white counterparts.
For those reasons, observers like Darrick Hamilton, president-elect of the National Economic Association and an associate professor of economics and urban policy at The New School, say that bolstering the economic fortunes of blacks would also lead to a commensurate rise in political power.
“Income is flow and wealth is worth. Wealth isn’t only assets such as home ownership and stock, it also includes political influence,” Hamilton told CNBC. “Wealth is far more powerful than income.”
Hamilton was supportive of the idea of black consumers parking wealth in black-owned banks, downplaying the idea of a backlash.
“People aren’t saying don’t bank [as a form of protest], so banking black is not a loss to the financial industry,” Williams said. “It’s merely a distributional change from one institution to another.”
Others insist that a focus on black economics should include all generations — especially millennials looking to build a movement for transformative social change. BMe Community, a national nonprofit focused on growing wealth and neighborhood building, redirected $1 million of its deposits to One United from another institution as a way of promoting the banking black movement.
Derek Smith, an art director based in New York, told CNBC that he planned to open an account at Carver Federal Savings Bank, the nearly 7-decade-old African-American institution that has fallen on hard timessince the 2008 crisis.
“I’m not going to close my other bank accounts,” said Smith. “But I do plan to open up a savings account for my son at Carver so he could understand that his life and his money should matter.”
Carver, named after peanut pioneer George Washington Carver, has increased the number of bank branches and ATMs in the NYC area, offering financial literacy workshops and products aimed at small business owners and budding entrepreneurs.
“If my son can learn about preserving the legacy of black banks and become financially savvy while doing so, I see no harm in that lesson,” he said.
Dedrick Muhammad, director of the racial wealth divide at the Corporation for Enterprise Development and a former economic advisor at the NAACP, told CNBC that the success of supporting black-owned institutions relied on buy-in from consumers.
“People need to change their perception about personal finance,” Muhammad said. “Having Harriet Tubman on the $20 bill is important, but it’s more important to get dollars in black hands.”
Even with the convenience of modern technology, Muhammad acknowledged there was no easy road to economic empowerment for the disenfranchised.
Consumers should “look at spending habits as investment habits. Purchasing power is not just a transaction. It should be part of an investment towards economic empowerment,” he added.