Breaking Barriers: The Banks That Are Supporting Black Financial Inclusion

February is Black History Month in the US, a time to celebrate progress and highlight positive changes, including those happening within the financial industry. While we honor the achievements of Black Americans, we must also recognize the financial challenges that persist – for example, the data shows that 39% of Black households are either struggling or require financial assistance, compared to 31% of Hispanic households, 30% of Native households, 21% of White households, and 15% of Asian households.

Many US banks and financial institutions are making significant strides to address these disparities. From tackling the racial wealth gap to increasing access to banking, homeownership, and entrepreneurship, efforts are being made to create a more inclusive financial system. But there is still a long way to go.

Addressing the racial wealth gap

Wealth disparities between Black households and the wider US population have been shaped by historical inequalities, including redlining (restricting access to financial products to those living within certain neighborhoods), exclusion from homeownership programs, and systemic income disparities. Major financial institutions have launched targeted programs to help close this gap and provide Black families greater access to wealth-building opportunities.

Expanding financial access for Black communities

Many Black households remain unbanked or underbanked, meaning they lack access to affordable financial services. This often leads to reliance on costly alternative financial services like payday loans. Data shows that 3.3% of Black households and 3.9% of Hispanic households have obtained a payday loan in the last 2 years, compared to just 1.3% of Asian households and 0.9% of White households. Banks and Fintechs are addressing this issue by introducing inclusive financial products and expanding digital banking options. Examples of these include:

• OneUnited Bank, the largest Black-owned bank, offering financial literacy programs and credit-building tools.
• Greenwood Bank, a digital banking platform providing no-fee banking and business lending for Black and Latino communities.
• MoCaFi (Mobility Capital Finance), a mobile banking app working to expand mobile banking and credit-building resources for underserved populations.

Supporting Black entrepreneurs and small businesses

The data show there is a disparity in business ownership in the US, with just 7% of Black households either owning or part owning a business, compared to 10% of Native households, 9% of White and Asian households, and 8% of Hispanic households.

Access to capital is essential for Black entrepreneurs looking to grow their businesses. Many banks and financial institutions have stepped up to provide tailored funding and mentorship opportunities. Carver Bank and Greenwood Bank are two example of financial institutions offering banking services and small business loans aimed at supporting Black and Latino entrepreneurs. While the Citi Foundation continues to build upon its 2020 Action for Racial Equity (ARE) initiative, a $1 billion commitment to pursue a range of business and philanthropic initiatives designed to help close the racial wealth gap in the US.

The Community Development Financial Institution Fund has also played a key role in ensuring that Black-owned businesses have access to fair and affordable credit. These institutions focus on economic development in underserved areas, helping entrepreneurs build and scale their businesses.

Inclusive lending and homeownership support

Recognizing the barriers to homeownership, financial institutions have launched initiatives to help Black families build wealth through real estate. Examples include:

• In 2024, JPMorgan Chase enhanced its homebuyer assistance programs, including grants and financial education for first-time Black homebuyers.
• In 2022, Bank of America introduced its Community Affordable Loan Solution, which offers zero-down-payment and closing-cost assistance programs to make homeownership more accessible in Black and Latino communities.
• In 2017 as part of a 10-year plan, Wells Fargo committed $60 billion in mortgage lending to increase Black homeownership.

These programs aim to correct historical inequities in mortgage lending and provide more Black households with the opportunity to own their homes, a key driver of generational wealth, and a big part of the American Dream.

Expanding financial literacy and inclusion

Financial education plays a critical role in helping Black families build wealth and make informed financial decisions. Banks are investing in educational initiatives to empower communities with the knowledge needed to succeed. In addition to OneUnited Bank and MoCaFi offering credit-building tools and financial literacy programs, JPMorgan Chase funds initiatives that provide financial coaching and budgeting tools for underserved populations.

By increasing financial literacy, these programs help individuals make better financial decisions, budget more effectively, improve credit scores, and build long-term stability.

Data shows that 16% of Black households would like to learn how to budget better, more than Hispanic (14%), Asian (11%) and White (10%) households. This sentiment is further echoed in their propensity to have a financial plan prepared.

The role of Fintech in bridging the gap

Data shows that Black households are more likely to use the services offered by challenger banks, 25% hold an account with at least one digital-only bank, compared to 22% of White households and 20% of Hispanic households.

The rise of Fintechs has provided new opportunities for Black communities to access banking services. Digital banks and mobile platforms are making it easier for individuals to save, invest, and build credit without the barriers that often exist in traditional banking. These platforms also offer tools that help users track spending, set financial goals, and access financial education materials.

Fintechs are also levelling the playing field for entrepreneurs. In a recent episode of the Banking Uncovered podcast, Kathryn Petralia, Co-founder of Kabbage and Keep Financial mentioned how Kabbage had twice as many women and minority customers than the general business owning population. She explained that “People could [apply for a small business loan] anonymously. You could apply online; you didn't have to sit across from a loan officer in a bank who is judging you and maybe doesn’t understand your business or you personally… [at Kabbage] just data was determining the outcome.”

A more equitable future

Financial institutions play a crucial role in breaking down barriers, but sustained efforts and continued investment are essential to creating a truly equitable system. Initiatives like JPMorgan Chase’s homebuyer assistance programs, Bank of America’s Community Affordable Loan Solution, and Citi Foundation’s Action for Racial Equity commitment are critical steps in closing the racial wealth gap. Digital banking platforms like Greenwood Bank and MoCaFi are also reshaping access to financial services, while institutions like OneUnited Bank continue to champion financial literacy.

Banks, Fintechs, and community organisations are working together to ensure financial inclusion for Black Americans. By offering affordable banking to the underbanked, supporting Black entrepreneurship, expanding fair lending practices, and increasing financial education, the industry is taking meaningful steps toward lasting change.

While challenges remain, the commitment from financial institutions is a positive step forward. As we celebrate Black History Month, let’s acknowledge the progress and support the institutions driving change for Black financial empowerment.