How Black banks have fought injustice and created currency for the culture

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Throughout U.S. history, Black-owned banks have played a pivotal role in counteracting systemic racial injustices. Although they have declined in numbers over the decades, dozens are still in operation and want to be a part of strengthening Black communities.

One of the nation’s newer Black banks is Redemption Bank, formerly Holladay Bank & Trust, in Salt Lake City. It became the first Black-owned financial institution in the Rocky Mountain region in 2025. Co-founder Ashley Bell, a former advisor to Donald Trump, launched the bank in partnership with Dr. Bernice A. King, daughter of the Rev. Martin Luther King Jr. In many ways, Redemption is picking up where King left off just before his assasination, in calling for a Black banking movement, said Bell.

“The reality is that communities don’t have access to banks that are FDIC-insured, regulated banks.
If you don’t have one in your neighborhood, that’s the equivalent [of] having a banking desert,” said Bell in an interview with the Amsterdam News. Currently (as of September 30, 2025), there are 24 federally insured Black-owned banks in the U.S., according to the FDIC’s Minority Depository Institutions (MDIs) list. This does not include credit unions and other minority-run financial institutions.

The first year under the current Trump administration has seen a serious economic downturn for Black communities across the board, according to the most recent study from the Institute on Taxation and Economic Policy (ITEP). Black unemployment rose from about 6.2% to 7.5%, especially among Black workers who were federally employed and Black women. Federal support was taken away from disadvantaged businesses, and the disparity in Black homeownership has only grown, according to the study.

With the reality of a Black recession on the horizon, against the backdrop of Trump’s mass deportation agenda, Black banks have continued their legacy of fair lending and community activism. This is in large part because of a long practice of resiliency and perseverance in the face of immense odds and violence throughout the country’s history, such as the Reconstruction Era, Great Depression Era, Civil Rights Movement, and 2008 Great Recession.

To be unbanked and underbanked

A household is considered “unbanked” if there is no one with a checking or savings account at a traditional bank or credit union. Reasons cited for this are usually because someone doesn’t have enough money to meet minimum balance requirements, can’t keep up with account fees, doesn’t have the ID needed to open an account, wants more privacy, or simply doesn’t trust banks. Many potential bank customers may use reloadable prepaid cards or online services, such as Venmo and Cash App, instead of traditional bank accounts. Nationwide rates of being unbanked are significantly higher among Black, Hispanic, and Native American households compared to their white counterparts, according to a 2023 Federal Deposit Insurance Corporation (FDIC) nationwide survey.

Similarly, a household is “underbanked” if someone has a regular bank account and a traditional credit card, but also uses money orders, check cashing services, or wires to pay most of their bills and receive income. They often have alternatives to mainstream credit, such as personal loans, rent-to-own services, pawnshops, tax refund anticipation loans, or payday loans with high interest rates. More than one in five Black, Hispanic, and Native American households were considered underbanked when compared with one in 10 white households in the U.S, according to the FDIC report.

“… when we talk about communities that are underbanked, it is those that live in banking deserts where the majority of the options are expensive to get access to their funds, which highlights the American enigma that it is expensive to be poor,” said Bell.

In New York City, the numbers of unbanked households have followed national trends in decreasing. However, since 2015, rates of unbanked remain the highest in nine neighborhoods, all of which are predominantly Black or Hispanic except for one. The majority of these neighborhoods are in the Bronx and Brooklyn, according to the city’s Department of Consumer and Worker Protection (DCWP) data.

In 2023, the DCWP reported that the Bronx accounts for a total of 16% of the city’s households, yet the Bronx represents nearly a third of all unbanked households. This means Bronxites are more likely to hit up risky financial servicers disproportionately located in their neighborhood to borrow money when needed.

“You’re paying more just to do business with these type of institutions, and therefore, limiting your ability to save and everything else. You’ll pay out more in those fees than you’ll ever accumulate in your net worth. That’s the issue with [being] unbanked and underbanked,” said Brandon Comer, a managing partner at the Alterity Capital & Comer Capital Group (CCG) and an investor in Redemption Bank.

“We should be thinking about how we grow with our financial literacy and our financial education, and that’s the care that comes with a mission-driven institution” said Comer. “That’s the care that comes with the Black-owned bank that may get lost with a lot of larger financial institutions.”

Impact on housing

In New York City, the role of Black-owned banks is tied to historic redlining and its lasting effects on access to credit for Black and Brown communities.

For decades, Black neighborhoods in Brooklyn and Harlem were systemically denied mortgages and business loans. One would think this was only a problem that occurred until the Civil Rights Movement, but it’s documented that these neighborhoods were financially ostracized well into the 1990s and even today.

According to 2024 loan data from the New Economy Project, Black homebuyers continue to pay higher mortgage interest rates and face higher denial and refinancing rejection rates than white borrowers, even at similar income levels, at three of the city’s major banks: Bank of America, Citibank, and JPMorgan Chase. DCWP research also shows that “fewer young, Black, and lower-income households” have been able to transition from renting to homeownership in the city since the housing collapse and economic recession of 2008. All together, these continuing inequities lead to the harshest impact of all: the inability to build generational wealth.

“Housing is so critical because it’s the number-one [recipe for] success in America,” said Bell. “We’re set up for us to live in a world where we’re paying for your home, but not living in a home that we own, so you [have] to think about what’s the next generation. The next generation without the ability to have real estate passed down from one generation to the next — that accumulation is stifled.”

Bell added that many non-Black customers or small businesses owners who use his bank are able to put up their home or a relative’s property for collateral and access to capital.

History rooted in community

After the Civil War ended, there were meager efforts from the government toward reparations for former slaves during the Reconstruction Era (1865–1877). Congress established the Freedmen’s Bureau, a kind of social services agency, and the Freedman’s Savings Bank (or the Freedman’s Savings and Trust Company). This savings bank was largely white-led, but catered to Black clientele at the time the Ku Klux Klan was founded, beginning a wave of anti-Black domestic terrorism.

Despite this violence over Reconstruction policies, there was a historic rise of a Black class of entrepreneurs, former Union soldiers, and property owners contributing to the Freedman’s bank. By 1873, though, the general economy of the country and the New York Stock Exchange had tanked and political corruption among the bank’s leaders took hold. Freedman’s floundered, and it was shut down in 1874.

Tuskegee University founder Booker T. Washington wrote in his book “The Negro in Business,” published in 1907, that the “first bank conducted by Negroes” was a failure. “The little savings of thousands of industrious freedmen were lost. Widespread as was the confidence and the hope that this institution inspired among all classes when it was first founded, the discouragement caused by its failure was even more wide-reaching,” wrote Washington. “It was years before the Negro people regained sufficient confidence in banks and in themselves to make a Negro bank possible.”

This sentiment is somewhat misleading — Freedman’s Bank was not Black-owned.

In addition, as Timothy Todd, a historian with the Federal Reserve Bank of Kansas City, wrote in his book “Let Us Put Our Money Together, The Founding of America’s First Black Banks,” that a type of financial system was formed by the Free African Union Society in 1780 in Newport, Rhode Island. This organization evolved into giving loans, kept savings, provided funds for the sick and poor, and helped with burial costs. Todd also said that beyond Freedman’s bank, there were community credit associations, as well as Black private lenders and wealthy Black business owners that provided community members with small loans, charitable donations, and lines of credit going all the way back to the 1830s and ’40s.

Still, it wouldn’t be until 1888, some 14 years later, that the first official Black-founded and -run banks were established, with the United Order of True Reformers’s Savings Bank of the Grand Fountain in Virginia and the Capital Savings Bank in Washington, D.C.

From there, Black banks flourished in places like Richmond, Virginia; Boley, Oklahoma (as opposed to Tulsa); Chicago, Illinois; Memphis, Tennessee; and Detroit, Michigan. Ironically, Harlem, dubbed the “Black Mecca,” had no Black-owned banks. The first bank in Harlem was the Dunbar National Bank, started by John D. Rockefeller Jr. in 1928.

Industrial Bank was founded in 1934 in D.C, and has had a longstanding Harlem branch on West 125th Street.

“Without question, there [are] very few of us left,” said Willie Blalock III, senior vice president and market manager at Industrial Bank for NY & NJ. “We were there when no one else wanted to bank with us. A lot of the customers we receive — they come to us because they’ve applied other places and have made deposits all these years, and now when they need the financial institution to do something for them, it’s an automatic ‘no.’”

The original branch started with just six employees and $192,000 in assets. Blalock joked that their founder, Jesse Homer Mitchell, literally went door to door asking for donations in the depths of the Great Depression. Now, more than 90 years later, Industrial is the oldest Black-owned commercial bank in the Mid-Atlantic region and still family-run. It has more than 140 employees and $770 million in assets, and is a Community Development Financial Institution (CDFI). The bank annually reinvests more than 60% of its assets back into the communities they serve through local hires, financial education sessions, financial fraud awareness programs, and investing in formerly incarcerated individuals and youth.

“Our Justice Exposed program is extremely unique,” said Blalock. “We actually go into prisons and talk to individuals who are incarcerated — women and men — about financing. In some cases, some have been in there for awhile and need a catch-up on all the technologies that are out there. We coach them on how to build banking relationships when they get out and are looking for employment. We’re one of the very few banks that are doing that because it is such a big part of our community.”

The future with mobile banking and crypto

With the advent of smartphones and widespread access to the internet, walking into a brick-and-mortar bank branch to deal with a teller is becoming a relic of the past. Almost half of banked households use mobile and online banking to access their accounts through their phones, computers, or tablets, reported FDIC.

“The phone is your bank now,” said Blalock. He’s in favor of the shift toward mobile and online banking, and considers it a good way to manage and secure money when fraud is so prevalent. “I work at a bank and I can’t tell you the last time I had to walk up to a window to deposit a check or get money, unless it’s a substantial amount.”

Bell said banking deserts essentially exist because of geography. He said certain commercial banks look at largely Black and Hispanic or low-income areas and “assume the crime rate is too high” or the “income is not high enough to make a profit.” He firmly believes the future of Black banking is in mastering technology and reaching college-aged youths, who aren’t carrying cash as much as older generations.

“Far too many of our banks are regionally locked or locked inside neighborhoods,” said Bell. “At some point, if they moved out and now they’re not physically driving by that bank, they’re not using it … We need to close that gap and be the bank that technologically you’ll want to use.”

This need to be more flexible with banking options became abundantly apparent during the COVID pandemic in 2020. Since that time, mobile banking in New York City has increased by 63%, said the DCWP.

There’s also been a boom in the use of cryptocurrency, a largely unregulated virtual and public encrypted financial system that is not government-backed. The FDIC survey found that crypto tends to be used more by high-income earners, more-educated people, a younger demographic, and Asian and white households. It’s becoming more popular with Black and Latino communities, but little regulation of the currency has left these same communities disproportionately vulnerable to related predatory fees, discriminatory lending, and financial fraud, reported ITEP.