Rose Oswald Poels, President and CEO of the Wisconsin Bankers Association, recently wrote a letter to The Wall Street Journal which they published in an article on Friday, Nov. 13. Below is the original letter.
“The Battle to Keep America’s Black Banks Alive” was right when it said “In many ways, the struggles of "Black-owned banks and small, community lenders are one and the same.” The high cost of regulations as well as keeping up with the technology demands of a public that expects safe, secure, and instantaneous online banking at their fingertips are just a few of the factors driving these challenges. Like other minority-owned banks, Black-owned banks are very mission-driven and to help them succeed in their mission, they need the support of others willing to help champion this effort.
Real progress begins with Congress and state legislatures promoting policies that recognize and support all minority-owned banks. This could include policies that allow for greater regulatory flexibility given the type of lending that occurs, and tax credits to help offset necessary investments in technology to improve compliant internal operations as well as allow them to compete with highly valued customer-facing products.
A recent study done by the Wisconsin Bankers Foundation and Dr. Russell Kashian of UW-Whitewater's Fiscal & Economic Research Center, supports a point made in the article about competing with the global or larger banks. The study found overall that race is a factor in a consumers’ choice of type of institution. “Our results found, interestingly, that the white students were statistically more likely to use a community bank, and Black students were more likely to use national banks, and Latinx students were more likely to use regional banks,” Kashian said. A possible explanation, he said, is that national banks are more likely to be in urban areas, whereas community banks tend to focus on a smaller, usually more suburban or rural, geographic footprint.
State and national banking associations are also champions of minority-owned banks and leveraging their resources will also further the success of Black-owned banks. In addition to the good work done by focused associations like the National Bankers Association and Minbanc Foundation, other banking associations offer products and services that can help Black-owned banks succeed. In addition to the advocacy support banking associations provide, they also offer high-quality educational programs to improve the professional development of bank staff, and other products designed to improve the business operations of banks. Many times, these are offered for members at discounted prices without sacrificing value.
Finally, all of us in and around the banking industry can do more to economically empower disenfranchised citizens, which will ultimately improve the financial situation of customers of all banks, notably including Black-owned banks. Financial literacy is critical to provide individuals with the right knowledge and tools to develop and sustain a solid financial foundation. Elected officials along with the private sector can provide Black-owned banks with financial support and the tools necessary to allow them to provide meaningful financial education to their customers and local communities.
A diverse banking sector is critical to meet the unique needs of our diverse country. We should all continue to do our part to help Black-owned banks, and all banks succeed.
On a similar note, WBA is hosting “A Conversation on Racial Equity.” Sponsored by the Federal Home Loan Bank of Chicago, this Dec. 9 program is intended to provide bankers with unique perspectives on racial equity to help us all learn how we can all improve and move forward on a path toward positive change.
By, Alex Paniagua