Thandisizwe Jackson-Nisan was 14 years old when the bank foreclosed on the home she’d grown up in. The foreclosure—and her family’s subsequent relocation to a shelter—was part of the fallout from that difficult time. “For 21 years I was a proud homeowner,” says Ms. Jackson. “But just like that, we lost everything.”

Mother and daughter found housing in a development where they quickly became its de facto social coordinators. “My mom and I were the ones hosting ‘conscious dinners’ and inviting the neighbors over for holidays,” says Thandisizwe. “We were always building community. That’s just who we are. We believe prosperity is a mindset, and we’ve always kept that mindset no matter what we’re up against.”

Unfortunately, she adds, financial security requires more than a mindset: “Even a good income only gets you so far. You need assets that can be handed down to future generations. If you don’t have that access, you’ll always be vulnerable even when things feel like they’re going well.”

Black households have only 10 cents in wealth for every dollar held by white households, according to 2016 Federal Reserve data. With the median black family having a total net worth (or what a family owns minus what a family owes) of roughly $16,000—compared to about $163,000 for whites—it’s more challenging, if not impossible, to realize economic resilience and security, as well as achieve upward economic mobility. The lack of assets among Black households sits at the intersection of historic and systematic racism. This story runs deep. It’s tied to slavery, wealth extraction, redlining, and discrimination: in its foundation, the financial system was not built to benefit Black people and people of color.

“This mess started with the era of chattel slavery,” says Jeremie Greer, Co-Founder and Co-Executive Director at Liberation in a Generation and a Prepare + Prosper Board member. Not only were white plantation owners able to build wealth based on a system of enslaved labor, but “insurance companies and banks were financing plantations in the south.”

And though more overt practices of redlining and discriminatory lending have become illegal and socially unacceptable, what many see as the root problem has not yet been consigned to history and disparities persist. “The mainstream financial system has rarely viewed poor people of color as a legitimate customer base,” says Jeremie. “It sees them as a community from which it can extract resources whenever it suits.” In fact, nearly half of black households compared to 17% of white households are considered unbanked or underbanked — a disparity that, over the course of a financial lifetime, can cost nearly $40,000 in fees.

The executive director of Build Wealth MN, Inc. David McGee has watched extractive financing (financial tools and services that leave a person worse off than when they found them) play out time and again over the course of his career. “Banks often justify their exclusionary behavior by arguing they’re protecting themselves from ‘risky’ customers,” he says.

One of these exclusionary practices entails charging Black, Indigenous, and other customers of color higher minimum balances to open and higher fees to maintain basic checking and savings accounts. According to a New America report on the racialized cost of banking, average costs and fees for basic, entry-level checking accounts are $190.09 higher for Black customers, $25.53 higher for Asian customers, and $262.09 higher for Latinx customers, compared to their White counterparts.

The excuses too many banks use to justify their exclusionary practices are baseless, says Jeremie. “What they do have is years of racism and bias guiding their decisions.”

The disinvestment of banks and credit unions in marginalized communities compounds the problem, as check cashers and payday lenders move into the “bank deserts” created when banks move out of the neighborhood. According to a Prosperity Now, in majority white counties, there are 41 banks per 100,000 people, compared to just 27 in majority BIPOC neighborhoods.  Even though the services offered by the alternative financial market fill a gap, they continue to extract wealth from the communities in these areas.

“The system was built to benefit exactly who it is benefiting and leave out exactly who is left behind,” said Jeremie. “Change needs to happen and FAIR’s work with a bank to shift the products, the practices, and the intended audience is an important start.”

How the FAIR banking solution creates access to intergenerational wealth-building

According to the Zero Wealth study, it’s all about the access with which you’re born. “By far, the largest factors explaining these differences in wealth are gifts and inheritances from older generations: a down payment on a first home, a debt-free college education, or a bequest from a parent … Black families have never had comparable resources to pass down to succeeding generations.”

Without those resources, says Ms. Jackson, life is always going to be a game of catch-up unless something changes. “Geoffrey Canada’s critique of our country’s education system sums it up: ‘If a train left Penn Station at 10 a.m. and it was traveling west at 30mph, and another train left Penn Station at noon and it’s traveling west at 30mph, when will train B catch train A? Never! It’s never going to happen. The delay on this train was intentional. It was deliberate and it continues to this day,’” Ms. Jackson shared.

Prepare + Prosper has worked with at least two generations of customers since 1971, when it launched its free tax program for taxpayers who have low- to moderate-incomes. Over the years, the organization has partnered with banks and credit unions to reach people who are financially underserved.

Because banks have yet to more fully meet communities’ needs,  customers still need ways to cash their paychecks and pay bills. Many turn to nonbank products and services in the so-called “fringe” financial market. Here, they encounter steep fees for everything from cashing a check to buying a money order to paying a bill. They also forego the benefit of keeping their money safe in an insured institution.

Starting in 2016, Prepare + Prosper started holding regular listening sessions, asking more than 200 customers to weigh in on what they would need from a bank to start (or continue) building and protecting wealth.

Based on input from these listening sessions, Prepare + Prosper partnered with Sunrise Banks and built accounts with the fees, features, and access they heard their customers wanted and couldn’t find anywhere.

“FAIR reaches a segment of the community the banks aren’t fully serving,” says Jeremie. “Until now, it has been the predatory lenders and check cashing places that have stepped up to fill that gap. FAIR brings competition into that segment. It says to the banks, ‘You don’t want to serve this customer base? That’s fine — we have a product and a partner that will.’”

Community distribution partners: The heart of the FAIR Financial Solution

FAIR doesn’t just offer products that help customers build (or rebuild) and maintain their financial security, it also unlocks future opportunities to build wealth. FAIR brings the entire customer experience to the community. Customers encounter FAIR products and services in non-bank touch points throughout the local area, where they live, work, gather, and worship.

This decentralized community distribution model — plus a digital platform featuring a full-service mobile app — gives FAIR the ability to expand beyond its pilot partners to reach customers the banking sector isn’t reaching.

The shift from products to partnerships and wealth-building possibilities  

“The loans, the investments, the savings, the modeling of healthy money habits for kids … these are the things that start to close the racial wealth gap,” David continues. “But you can’t do those things if you can’t get your credit where it needs to be. The FAIR products get things moving in the right direction.”

FAIR also proves the viability of a sustainable model that benefits the customer, the institution, and the community partners, he says.

“There’s never been any reason why everyone can’t succeed together. There’s a major revenue stream here with customers the banks have ignored. Banks can still be profitable without charging excessive fees.”

Hope for the future, and a new legacy of trust

“Part of parenting,” says Ms. Jackson, “is wanting more for your children than what you had. I’ve witnessed the impact of generational poverty and the reliance on check cashers and payday lenders. Because of my experience [with FAIR], I believe we have the opportunity to change that by building wealth and prosperity for future generations.”

“I’m up next,” says Thandisizwe. “I’m the future of my family. And I feel hopeful. I have big plans for my business. Part of what makes these plans feel accessible is having financial tools I can count on to help me build wealth, managed by people we can trust.”