Frequently, questions about diversity in fintech center on gender diversity, and that gender diversity means “white women.” When an organization is predominantly white, it tends to focus on attracting customers who look like its employees and leadership—white ones, though that’s often not deliberate.
This often leaves nonwhites, both employees and customers, feeling alienated and underserved. In financial services, where Blacks get excluded from access to products, services and fair lending practices, it also perpetuates systemic inequities. This problem is prevalent in fintechs, too, and gets driven by a lack of Black leadership in the firms.
In his Medium Post, “Fintech’s Race Problem,” Georgetown Law professor Chris Brummer cites a Harvard Business Review article that says fewer than 2% of tech executives and only 5.3% of tech professionals are Black.
He further asserts, “With fintech accounting for perhaps 10 to 15 percent of tech employment overall, the gross numbers of full time, African American fintech executives and professionals could be in the hundreds, not thousands.”
Betterment Steps Up
To address inequities across fintech, Betterment, a money management fintech led by founder and CEO Jon Stein, spearheaded the launch of the Fintech Equality Coalition in August 2020. Like many, Stein got motivated by the ongoing murders of Black men by police and vigilantes to make the move.
He recognizes people might question his timing and commitment, but Stein, who spoke candidly about why he felt compelled to take a stand in June, says, “It’s not that the problem wasn’t there before, but racism as a pervasive and systemic problem has been highlighted by the current political environment.”
“Sometimes movements are catalyzed by events,” Stein continues. “We thought it was time to take action as a company and a community, so we started talking internally about what we could do to influence our industry, financial services, our sector, technology and the nation at large.”
While Betterment is a small company within the financial services industry, it’s one of the largest in the fintech space. He and his team decided the fintech still could make a significant impact on the industry and society by “changing the way we think about equality in our industry and society,” he says.
Coalition members, Stein continues, are “committing to equality in the workplace, and to sharing data and annual reporting on hiring,” particularly equity data.
“This fintech coalition was one of several ideas borne out of our conversations,” he adds. “Over $100 billion dollars of value of companies have signed up, and more continue to join,” he adds. There currently are more than 50 companies in the Fintech Equality Coalition, and all are publishing their individual equity commitments to equity by year-end.
Starting Change From the Inside Out
Betterment is examining its equity practices internally and publishing data about its employee demographics, which show that 71% of its full-time employees and 80% of its leadership team are white.
Just 5% of its full-time employees, and 2% of its leadership team, are Black. But Stein has pledged to increase diversity in Betterment’s ranks. They’re also engaging in “all hands” antiracism training, some led by newly appointed Black advisory board member, Netta Jenkins.
Moreover, the fintech is opening up front doors for clients that reduce barriers to underserved banking populations. They make it easy for customers to open checking and investment accounts with no minimum balance and no minimum fees. They’re also considering the needs of customers who may have different priorities for opening investment accounts.
“Some of our team members said retirement in their families means they’re taking care of their parents,” Stein explains. “So, as we frame our advice, we might introduce caring for parents as an option.” He also believes their increasing internal diversity is helping them define the needs of nonwhite customers.
Stein says the fintech is working with Black financial advisors and planners to serve Black community members. Betterment also is scrutinizing how it builds its advice platform to ensure the language it uses and the questions it asks aren’t introducing biases.
Encouraging Racial Diversity Among Coalition Members
So far, four Black-owned fintech are among the 16 fintechs with nonwhite founders or CEOs who’ve joined the coalition, and five are women. The Black-owned fintechs include Cadre, Guidefi, Halo and Renaissance Payments.
Charlene Fadirepo is CEO of Guidefi, a Black-owned financial technology company that connects women and people of color with financial advisors and financial education. Of her decision to join the Fintech Equality Coalition, she says, “We are at a critical juncture in the history of America, where there is a real opportunity to create sustainable economic justice for all, starting with the Black community.”
Fadirepo continues, “Systemic racism threatens our democracy and our economy and the Fintech Equality Coalition represents the start of a much-needed effort to create a more inclusive economy for all Americans.”
She hopes her contribution to the Coalition will “accelerate sustainable and transformational change in the fintech industry,” she says. “As a Black woman, I have seen the need for this work on Wall Street, Main Street, and in the federal government.”
“I also have experienced the trauma of systemic racism during my 20-year career in financial services,” Fadirepo continues, “and I believe that courageous, informed leadership in this moment is critical to create a new dynamic financial ecosystem, where everyone participates, and everyone belongs.”
Renaissance Payments, which takes a microservices-first approach to HR/benefits to help small businesses compete at the highest levels, is another Black-owned fintech member of the Coalition.
Its Founder and CEO Joseph Akintolayo explains his reasons for joining: “Being one of a handful of Black founders in fintech means I have a responsibility to my community to create equity through leadership and a duty to my peers to educate them on blind spots that may be contributing to inequality.”
Akintolayo says the firm recently launched mycaresact.com, where small businesses can apply for SBA COVID-19 crisis loans. He says of the initiative, it helped “preserve the American dream for more than a hundred Black and minority businesses.”
Coalition member Halo attempts to eliminate the need for payday loans with peer-to-peer lending, and Cadre offers users a professionally curated portfolio of real estate investments.
Black-Owned Fintechs You Can Support
While enterprise support of Black-owned fintechs is vital, many may not be as well-funded and need your support to thrive. Here are 10 you can help flourish while building your wealth:
- BREAUX Capital. As Guidefi focuses on wealth development for Black women, this fintech focuses on helping Black men build wealth by letting them pool their money and forms of capital to support each other financially.
- CapWay. Started as a solution to the lack of access in many Black communities to banking services, the CapWay account’s FDIC-insured debit card offers no hidden, overdraft or minimum monthly balance fees. It’s also committed to financial literacy.
- Goalsetter. This app, which links to your existing bank account, is money management for the entire family, and it offers a debit card that helps you develop financial literacy as you spend.
- GRIND Banking. Established in South Los Angeles, this fintech offers a fee-based FDIC-insured debit account plus a mobile banking app, and early pay if you set up direct deposit.
- Invest Sou Sou. Establish goals with your friends, then borrow money from and lend money to people you trust with this lending circle app, which is especially handy if you don’t have the credit to get a traditional bank loan.
- Jamborow. Africa’s first AI and Blockchain platform helps the continent’s unbanked and underbanked, particularly street vendors, small entrepreneurs and rural populations. It offers access to secure financial services, including peer-to-peer and traditional lending.
- Jammber. If you’re a music industry creative, this app helps you get paid faster, track your creative collaborations and get your royalties or split payments all in one place. It’s also available in multiple languages.
- MoCaFi. Focused on helping low- and moderate-income people access low-cost banking services, the app offers a bank-backed, FDIC-insured debit card and helps you “transform your relationship with money, credit and wealth.”
- Qoins. If you want to pay off debt faster without overthinking the process, this app can help by automating monthly debt payments, while helping you save money each month.
- Spendebt. Use micropayments generated through your daily spending to pay off your debt more quickly with this app that charges a maximum fee of $2.99 for unlimited monthly transactions.
As with any other fintech that offers investment opportunities, the investment accounts provided by these fintechs are not FDIC insured. (As stated above, the banking, or cash management, accounts are.) So, carefully research the accounts being offered to determine if they’ll meet your needs.
These platforms are more committed to personal financial well-being than many traditional banks and investment firms. That’s because they’re focused on serving underserved populations with easily accessible financial services. They also want to help close the global Black-white wealth gap.
If you’re looking for a more traditional banking relationship with a Black-owned bank or credit union, visit nonprofit BankBlackUSA to find one.
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