By CultureBanx Team
- Neobanks offer an easily accessible bank account with no monthly fees or minimum balance requirements and are catering to niche markets
- The Black community makes up 18.2% of the unbanked and 31.1% of the underbanked group in the U.S.
As a number of neobanks, also known as digital banks, come online they are building products catered to very specific markets. When you consider the Black community makes up 18.2% of the unbanked and 31.1% of the underbanked group in the U.S., according to the Federal Deposit Insurance Corporation, neobanks can be a real game-changer for this demographic. Is it possible for these new digital banks to make a measurable impact on financial inequality and address issues of access, fairness, and fees that have often had a discriminatory legacy?
Why This Matters: Most neobanks offer an easily accessible bank account with no monthly fees or minimum balance requirements. They typically come with an easy to use modern mobile app experience as well. For example, there’s Greenwood, a bank for Black and Latino customers that raised $40 million in March. Then there’s CapWay, which has raised $145,000 via six-seed rounds and targets the unbanked or underbanked Americans.
Nine time NBA All-Star Russell Westbrook joined fin-tech firm Varo Bank earlier this year, as a new investor and advisor after helping to lead its latest $63 million funding round. In 2020, Varo became the first consumer-focused fintech company to get approval from the FDIC, so it’s considered a national bank and allowed it to take customer deposits. Westbrook is on a quest to improve banking relations with minority communities.
“The banking system has ignored or underserved a large portion of the American population – particularly communities of color,” Westbrook said in a statement.
Situational Awareness: CB Insights found that new banks are killing it globally, with 6 European digital “challenger banks” gaining 30 million customers and $4.2 billion in funding since 2014. Not to mention that Brazil has at least 19 neobanks.
CBx Vibe: “ATM” J. Cole