Problem
The financial system fails to meet the needs of low-income communities
Mainstream Finance
Excludes
25M households in the U.S. are underbanked or unbanked
45M people in the U.S. are credit invisible
Alternative Finance
Extracts
$9 billion is extracted from low-income communities of color annually through exploitive interest rates up to 600%
Faced with financial exclusion, people turn to their social network and engage in Community Finance
U.S. Households hold over $200B in peer-to-peer debt
The United States has a long history of race-based financial exclusion.
19th-century actuarial underwriting explicitly devalued Black lives. About a century later, the practice of “redlining” excluded Black households from the mortgage market, accelerating racial wealth gaps that persist today.
In the 1980s, banks intensified their focus on wealthy customers, raising deposit limits, closing bank branches in low-income areas, and increasing bank fees, excluding millions of low-income people from mainstream finance.
The 1996 Federal Personal Responsibility and Work Opportunity Act decreased cash payments to people living below the poverty line and slashed welfare rolls by making welfare harder to access, further limiting capital in minoritized communities.
Financial exclusion is the result of historical and modern public and private policy decisions.
