digital-only neobanks. Nonetheless, a physical presence still matters. Banks can do an “equity check” to analyze their policies to see if there are negative side effects, even unintended ones, that hurt their Black customers disproportionately. Insurers, for example, can take a hard look at their risk algorithms to ensure that Black consumers pay fair premiums, especially compared to non-Black consumers of the same profile.
,” meaning that they do not have a credit score. That makes them subject to higher interest rates—if they can get a loan at all. But these individuals are not necessarily credit risks; they could have flawless rent and bill payment records, for example. This is a hidden market to serve. Another could be to help with short-term cash needs. Payday loans, which have an average
, are often used to bridge a cash gap. Clearly, then, there is a market for products that meet emergency cash needs at profitable but not punishing interest rates.Because Black Americans are more likely to be suspicious of banks and other financial institutions, increasing Black representation can help to break down barriers. It could also reduce the chances of customers being challenged for
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