A large bank with a national presence and cutting-edge technology may seem like the perfect financial fit for Dr. Adama Jackson, an entrepreneur and recent transplant to a new city.
But he has bigger goals.
Jackson kept most of his personal savings with Black’s bank. It didn’t sit well with him, but he saw the move as a show of support for his community and an investment toward closing the racial wealth gap.
Today, Black-owned banks make up less than 1% of all banks insured by the Federal Deposit Insurance Corporation. In 2021, there will be less than half the number of Black-owned banks in business than 20 years ago, with less than half the number of assets, according to the FDIC.
Those who remain rely on businesses from clients like Jackson to provide resources to local communities — from financial literacy courses to much-needed access to financial products.
“I just want to put my money in a community-based place,” he said.
Here’s why Jackson chose a Black-owned bank despite some limitations, and how he balances the necessary convenience with community support.
Value Based Banking
Jackson, 50, is committed to supporting Black-owned banks that he sees doing good in his community.
He had long known these institutions through church- and neighborhood-run banks, but recently he found a deeper meaning in supporting Black-owned businesses and banks.
While building a local dance company business, Jackson began looking for more ways to uplift the black community in Cleveland. He follows community news and turns to social media for more resources. There, Jackson became interested in Killer Mike, an online banking pioneer turned rapper, and his push for more banking products and services tailored to help black Americans manage their money.
“Someone from the hip hop community speaking that language” is inspiring, Jackson said.
So he decided to open both a checking and savings account with OneUnited Bank, a Black-owned bank with a branch location in Cleveland.
Even after opening a new account, Jackson was hesitant to move all of his money out of the national bank he had previously conveniently owned. So she uses the new bank for her checking and personal savings needs, and keeps her existing business account with Chase for business (along with several smaller accounts with local credit unions).
At the time, Jackson said the bank did not have online banking or 24/7 customer service. As an entrepreneur, he needs to pay vendors, check his accounts regularly, and deposit and transfer money easily online without worry. The lack of online or mobile services meant he was unable to fully run his day-to-day business operations.
Why Black-Owned Banking Matters
Black-owned banks can help close the financial gap for black Americans by providing the education and access needed to manage money.
But many FDIC- and NCUA-insured minority depository institutions do not have as many customers or assets as major national banks. Often, this means these banks lack the funding for technology and services that larger financial institutions have — such as mobile apps and online banking with top-of-the-line features and design.
The more customers who, like Jackson, open accounts and deposit money, the more leverage the Black-led and owned bank offers to offer more updated services and tools, such as mobile-first banking, financial literacy classes and high-yield savings. accounts to the communities they support.
From his own experience, Jackson believes these more sophisticated features are essential to helping Black-owned and Black-led banks meet the needs of their communities. “We, as a community, don’t have access to financial literacy,” he said. “We need industry standard tools.”
Resources remain a problem.
“Part of it is supporting to drive viability,” Wole Coaxum, founder and CEO of MoCaFi, a Black-led online bank, previously told NextAdvisor.
Opening an account, as Jackson did, can help Black-owned banks stay in business and provide more services and products. You don’t have to put all your money in one bank to help close the financial gap facing minorities.
“You don’t have to change your behavior or anything. But in your daily behavior, you serve and support the business and support the community,” said Coaxum.
Navigating Multiple Bank Accounts
For his own business, Jackson says he needs “access and accessibility. Can I deposit money anywhere? Can I call someone if I need to?”
It became more difficult to sacrifice the convenience of a big bank when he left Cleveland and moved to Los Angeles. However, Jackson kept his OneUnited account as a sign of continued support, and because at first he couldn’t find another Black-owned bank in his new city.
Today, Jackson has found a balance between his financial needs and his personal goals to support Black-owned businesses and communities.
Like most people, he has several bank accounts for different types of banking. That includes both his OneUnited account for personal banking — “It’s money I don’t necessarily need to access,” he says — and his Chase business account for more timely transactions.
Fees from separate accounts can add up quickly. Chase charges fees for excessive transactions and monthly services, but Jackson doesn’t mind as long as he can easily manage his business finances. “I always run money through it. So that’s just something I have to deal with,” he said. OneUnited also charges some monthly fees, but he meets the minimum balance required to waive those fees.
Looking to the Future
For now, Jackson plans to keep both Chase and OneUnited bank accounts, but he admits that it’s not a perfect solution. Hopefully, something better is coming: he’s looking forward to a new online platform, backed by Killer Mike, which he hopes will offer more features he needs to handle his personal finances on the go.
Until then, Jackson will continue to put his money where his mouth is, even if it’s a little uncomfortable.