June 19, 2021

The Case For Accelerating Financial Inclusion In Black Communities


As of 2016, the average black American family had total wealth of $17,600—about one-tenth the wealth of the average white American family, which stands at $171,000. This gap leaves many black families at a significant economic disadvantage, with less financial security and less ability to fully participate in the economy. Less wealth also means black Americans are underrepresented in the market for financial products and services.

A lack of access to financial services is not just a symptom of the racial wealth gap; it is also a cause. Without the ability to affordably save, invest, and insure themselves against risks, many black families struggle to translate the income they earn into wealth. As International Monetary Fund Deputy Managing Director Mitsuhiro Furusawa stated, “Financial inclusion is the bridge between economic opportunity and outcomes”

But building that bridge has not been easy. Black families have faced the compounding effects of decades of exclusionary policies and programs that have contributed to the racial wealth gap. This article explores the ways in which the lack of financial inclusion contributes to and perpetuates the racial wealth gap; it also identifies how greater access to financial services could be central in closing the gap.

Fundamentally, improving financial inclusion would help address historical challenges and better equip black families for today. Exclusionary policies and strategies, from limited access to federal mortgage lending to geographic barriers to physical bank branches, have hindered black economic well-being. For example, nearly half of black households are unbanked or underbanked 3 —a disparity that, over the course of a financial lifetime, can cost nearly $40,000 in fees.

Disparities such as these have tangible and far-reaching implications for black families. Improving financial inclusion is not only our collective, societal obligation to support American families that have too often been historically marginalized but also a critical step in supporting the future economic livelihoods of black families. Moreover, increased inclusion of black Americans in the financial system would benefit the entire economy: black families would have greater opportunities to reinvest and grow their wealth and, subsequently, support increased economic activity.

The inclusion of black families in the financial system would also create new opportunities for financial services companies. Our research shows that financial institutions could realize approximately $2 billion in incremental, additional annual revenue if black Americans had the same access to financial products as white Americans. If black Americans reached full parity in terms of wealth with white Americans, financial services companies could realize up to $60 billion in additional revenue from black customers each year.

As the world evolves, financial services companies should view financial inclusion of black Americans as a critical business imperative. In a time of severe economic inequality, companies that lead the way in creating solutions for black communities have an opportunity to build an enduring legacy that is aligned with consumer demand; indeed, 64 percent of Americans say that a company’s primary purpose should be making the world better,5 and by 2043, the majority of Americans will be people of color (POC).6 In addition, our present moment represents a meaningful opportunity to counter decades of exclusionary practices and rebuild trust with black communities. Doing so could improve the competitiveness of financial services firms and accelerate financial inclusion for black families.

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