Urban Institute: Digital Divide Is Hampering Black Credit Unions
A report from the think tank Urban Institute highlighted the importance of strengthening technological offerings for Black credit unions. Learn why.
Report from think tank highlights importance of strengthening technological offerings to help better serve members.
Online and mobile banking have grown tremendously during the past several years, but Black credit unions lag far behind other institutions in offering those services, the Urban Institute revealed in a new report.
“The disproportionate lack of types of digital banking service offerings by Black depository institutions is glaring, as it takes place against the proliferation of digital banking across the financial services sector more broadly,” the Washington DC-based, non-partisan think tank said. “By improving their technological apparatus, Black depository institutions can more efficiently grow and expand services to communities of color.”
Findings in the Report
Using data that included credit union call reports from the end of the third quarter of 2022, the Urban Institute found that:
–The average Black credit union is 44% of the size (in terms of assets) of the average non-Black minority credit union and 19% of the size of the average nonminority credit union.
–82% of nonminority credit unions reported having an informational website, compared to only 52% of Black credit unions.
–73% of nonminority credit unions had a mobile application, opposed to just 36% of the Black institutions.
–83% of nonminority credit unions offered online banking services, compared to only 50% of Black credit unions.
Takeaways and Recommendations
The Urban Institute said that by strengthening the technological apparatus of Black depository institutions, the federal government and other stakeholders can help close the technology gap that threatens these institutions.
The report noted that several federal agencies, including the NCUA, have programs supporting minority institutions and that some of them offer technological assistance.
For instance, the NCUA’s Community Development Revolving Loan Fund (CDRLF) has had a digital services and cybersecurity component that offers financial assistance to “better protect the credit union and its members against cyberattacks, increase the access of low-income and underserved communities to safe and secure digital financial products and services, and acquire software and equipment that supports a remote work posture or delivers products and services to members without physical access to a credit union facility.”
Providing technological assistance to Black credit unions can help solve some of the broader issues that the institutions and the people they serve may face, the think tank said.
“Although eliminating technological disparities cannot solve all the challenges these institutions face or the communities of color they serve, closing this gap could better enable them to provide communities of color more access to financial opportunities and ultimately help address the broader racial wealth gap,” the institute concluded.