While the share of unbanked households in the U.S. dropped to a record low in 2024, one out of three Black households remain unbanked, according to the FDIC. This data spotlights persistent racial disparities in the banking system, where Black households are “more than five times as likely to be unbanked and more than twice as likely to be underbanked, compared to white households,” as outlined by Banking Dive. The most likely racial group to face such steep barriers to banking, Black Americans experience a disproportionate impact on economic opportunities available to them and their communities.
To address a racial gap in financial services, Black banks were formed, and their numbers were on the rise through the mid-1970s, when 50 such institutions could be found across the country. Today, that number stands at 23 Black-owned and run banks and savings institutions. “If we make the assumption that Black owned banks are more likely to provide credit on reasonable terms to Black clients, then their absence is really important in the context of a situation in which black people are confronted with discrimination in credit markets,” says William Darity, professor of economics at Duke University, in Mashable’s article on black banking.
“The #1 reason it’s important for Black banks to exist is because the majority of them do work in what the U.S. designates as low to moderate income census tracts,” says Rod Chavez, executive director of the National Black Bank Foundation (NBBF). The foundation supports the Black banking sector by “aggressively revitalizing and modernizing historically undercapitalized Black banks that will in turn lift up Black families, Black businesses, and Black communities across the country.” NBBF helped foster a historic deal with Major League Soccer, the first commercial transaction between a professional sports league and a syndicate of community-focused Black banks and also backed the Black-owned bank financing the redesign of the Baltimore Arena.
While these marquis achievements may get major recognition, it’s the work Black banks do to support everyday Americans in achieving their dreams that makes the most difference for Black families and communities. These committed banks include Washington, DC’s Industrial Bank which was founded following the Great Depression to focus on positively impacting economic development in Black communities along the Eastern Seaboard. A Black bank based in the deep South, Carver State Bank, was also founded in the wake of the Great Depression to provide the “building blocks for financial freedom” especially for low-income individuals and communities.
Founder of Bank Black USA, Stephone Coward is on a mission to motivate people to move their money to Black-owned banks. A key player in the Bank Black movement, the organization knows customer growth is key to Black banks’ success, so Bank Black USA provides resources to empower consumers, including a dashboard, lists, maps, and an app. In addition to the 23 Black banks across the country, there are more than 300 credit unions at least partially Black-owned. “When you do business with a Black-owned financial institution, you’re not just supporting a single organization,” according to Bank Black USA. “You’re supporting the broader Black community and helping businesses, homeowners, and individuals secure the resources to thrive.”
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