The Inequalities of Banking and Finance

Society stands on the precipice of a revolution, built on cumulative technological advancements fueled by their combination with finance. Some consider this revolution part and parcel of the rapid build-up to a technological singularity, introduced by advances in artificial intelligence. These technological advancements may completely transform the financial system, making it unrecognizable in just a few short decades. The advancements that emerge from combined financial and technological, digital tools—referred to as fintech—are poised to revolutionize when, where, and how paychecks are deposited, bills are paid, money is sent, credit scores are determined, and lending decisions are made.

Fintech’s expansion coincides with the financial system’s shifts away from in-person transactions toward online and mobile services and emerges at a time of declining brick-and-mortar bank branches. It is less costly for banks to deliver products and services via online and mobile banking, especially as their customers increasingly adopt these technologies and assume the associated costs. Nearly 20 percent of bank branches are projected to close over the next decade as banks transition to delivering products and services via online and mobile platforms.

The concurrent trends of declining branches and expanding fintech pose real challenges for people’s full and dignified participation in today’s economy. For example, banks that maintain branches in Black and Brown communities levy higher fines and fees, exploiting their residents’ entrée into the economy and extracting their economic power. The rise of fintech also enables new manifestations of racialization in banking and finance. While online and mobile banking are heralded as superior alternatives to brick-and-mortar branches, these fintech alternatives may be forced, expensive, and exploitative choices for some customers. Insidiously, fintech may be another tool for surveilling and preying on Black and Brown communities by requiring individuals to sacrifice their privacy in order to manage their money.

This agenda studies inequalities in banking and finance in order to identify the evolving challenges presented by a transforming financial system and the policies that can equalize access. This research aligns with and reinforces organizing and policymaking efforts related to democratized finance, public banking, digital and financial inclusion, and internet neutrality.

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Friedline, T., Naraharisetti, S., Weaver, A. (2020). Digital redlining: Poor rural communities’ access to fintech and implications for financial inclusion . Journal of Poverty, 24(2), 168-192. https://doi.org/10.1080/10875549.2019.1695162

Friedline, T., Franklin, T., Morrow, S., & Kugiya, J. (2020). The promises and perils of community benefits agreements: Evidence from public comments to a large bank merger. Ann Arbor, MI: University of Michigan School of Social Work.

Friedline, T., Oh, S., Klemm, T., & Kugiya, J. (2020). Exclusion and marginalization in the financial system: Frontline employees as street-level bureaucrats . Ann Arbor, MI: University of Michigan School of Social Work.

Friedline, T., Dunham, I., & O’Brien, M. (2019). The financial services environment and schools’ savings rates in the San Francisco Kindergarten to College program . Journal of Consumer Affairs, 53(4), 1797-1824. https://doi.org/10.1111/joca.12264

Friedline, T., Despard, M., & West, S. (2019). Does the composition of financial services in a community relate to an individual’s savings account ownership? Journal of Community Practice, 27(1). doi: 10.1080/10705422.2019.1580652