A large bank with a national presence and advanced technology seems to Dr. Amaka Jackson, an entrepreneur who recently moved to a new city, felt like the perfect financial solution.
But she has bigger goals.
Jackson keeps a significant portion of her personal savings in a black-owned bank. It’s less convenient for her, but she sees the move as a sign of support for her community and an investment in closing the racial wealth gap.
Today, black-owned banks account for less than 1% of all banks insured by the Federal Deposit Insurance Corporation. In 2021, less than half of black-owned banks were in business than 20 years earlier, with less than half the assets, according to the FDIC.
The companies that remain rely on commissions from clients like Jackson to provide local communities with resources – from financial literacy courses to much-needed access to financial products.
“I just wanted to put my money into a community-based place,” she says.
Here’s why Jackson chooses black-owned banks, despite some restrictions, and how she balances necessary amenities with community support.
Jackson, 50, became involved in supporting black-owned banks that she saw doing good in her community.
She has long been familiar with these institutions through church and neighborhood banks, but only recently has she discovered a deeper meaning in supporting Black-owned businesses and banks.
While building a local dance company, Jackson looked for more ways to uplift black Americans in her native Cleveland. She followed the community news and scoured social media for more resources. While there, Jackson became interested in Killer Mike, the rapper-turned-online banking pioneer, and his quest for more banking products and services tailored to help black Americans manage their money.
“Someone in the hip-hop community who speaks that language” was inspirational, says Jackson.
So she decided to open both a checking and savings account at OneUnited Bank, a black-owned bank with offices in Cleveland.
Even after opening the new accounts, Jackson was reluctant to withdraw all of her money from the convenient national bank she previously had. So she used the new bank for her personal checking and savings needs, while keeping her existing business account with Chase for business purposes (along with a few smaller accounts at local credit unions).
At the time, Jackson says, the bank didn’t have online banking or 24/7 customer service. As an entrepreneur, she had to pay suppliers, check her accounts regularly, and deposit and transfer money online without worry. The lack of online or mobile services meant she could not fully run her day-to-day business operations.
Why black-owned banks matter
Black-owned banks can help fill financial gaps for black Americans by providing the education and access needed to manage money.
But many FDIC- and NCUA-insured minority custodians don’t have as many customers or assets as large national banks. That often means these banks lack the funding for technology and services that larger financial institutions have — like mobile apps and online banking with best-in-class features and design.
As more customers, like Jackson, open accounts and deposit money, the more influence Black-run and Black-owned banks need to have to offer more services and updated tools like mobile-first banking, financial literacy courses, and high-yield savings accounts to the communities they support.
From her own experience, Jackson believes these more advanced features are critical to helping Black-owned and Black-run banks meet the needs of their communities. “We as a community didn’t have access to financial literacy,” she says. “We need industry-standard tools.”
Resources remain an issue.
“Part of that is driving profitability,” Wole Coaxum, founder and CEO of MoCaFi, a black-owned online bank, previously told NextAdvisor.
Opening an account like Jackson did can help black banks stay in business and offer more services and products. You don’t have to put all your money in a bank to fill the financial gap faced by minorities.
“You don’t have to change your behavior or anything like that. But in your daily conduct, you serve and support businesses and communities,” says Coaxum.
Navigating multiple bank accounts
For her own business, Jackson said she needed “access and accessibility. Can I deposit money anywhere? Can I reach someone if I need to?”
Giving up the comforts of a big bank became even harder when she left Cleveland and moved to Los Angeles. However, Jackson kept her OneUnited account open to show her support and because she was initially unable to find other black-owned banks in her new city.
Today, Jackson has found a balance between her financial needs and her personal goal of supporting black-owned businesses and communities.
Like many people, she has multiple bank accounts for different types of banking. This includes both the OneUnited accounts for personal banking — “It’s money I don’t necessarily need access to,” she says — and her Chase business account for more timely transactions.
Separate account fees can quickly add up. Chase charges fees for excessive transactions and monthly services, but Jackson doesn’t mind as long as she can easily manage her company’s finances. “I’m always making money. I just had to accept that,” she says. OneUnited also charges some monthly fees, but it meets the minimum balance requirements to waive it.
Look to the future
For now, Jackson plans to keep both Chase’s and OneUnited’s bank accounts, but she concedes it’s not the perfect solution. Hopefully something better is to come: she is currently looking forward to a new online platform powered by Killer Mike which she hopes will offer more features she needs to manage her personal finances on the go.
Until then, Jackson will continue to put her money where her values lie, even if it’s a little less convenient.