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JP Morgan Chase, Citi, and Bank of America have invested $40 million in Black-owned challenger bank Greenwood Financial.
The Atlanta-based fintech aims to serve Black and Latinx communities. Other big-name backers include Truist Financial Corp who led the round alongside fellow banks Wells Fargo, PNC Financial Services Group, and Banco Popular.
Other names in the round include Mastercard, Visa, FIS, and venture capital firms such as SoftBank’s Opportunity Fund.
Greenwood plans to use the fresh capital to launch its first product this summer, according to Reuters. It will offer both spending and savings accounts. Other features will include virtual debit cards, peer-to-peer transfers, and mobile check deposits. As well as free ATM withdrawals in more than 30,000 locations.
The start-up will add lending in the fourth quarter of 2021. Credit and investing products will arrive next year.
Chairman and co-founder, Ryan Glover, explained Greenwood’s vision back in January.
“We plan on creating, between the summer of this year and the end of 2022, a whole suite of financial services. Utilising all of our partners to provide a robust mosaic of banking services for our community a one-stop shop, if you will.” It is yet to unveil its banking partner.
The start-up has already gained significant traction among consumers, having accrued 500,000 sign-ups in the first 100 days of launching a waitlist.
“We see that there is definitely an appetite for what we’re doing,” says Glover, who founded the digital bank alongside civil rights leader Andrew Young, and rapper and activist Michael “Killer Mike” Render.
The team last raised $3 million in seed funding from private investors in October. This brings its total capital raised to date to $43 million.
First Boulevard, another Black-owned challenger bank formerly known as Tenth, raised $5 million in seed funding at the end of last month.
The unbanked rate for Black and Latinx households in 2019 stood at 13.8% and 12.2%, respectively. The unbanked rate for White households stood at 2.5%, according to a biennial Federal Deposit Insurance Corporation (FDIC) report.
“The African-American community has had mistrust, rightly so, for the banking industry for decades,” Glover said in January. The four biggest banks in America have settled lawsuits for discrimination against Black and Latinx communities.
“And it’s not a mystery that the African-American community is routinely charged more than other communities for checking accounts, conventional loans and other banking services.”
JP Morgan was embroiled in a racism scandal as recently as December 2019, and in July 2020, it finally eliminated terms such as “blacklist,” “master” and “slave” from its internal technology materials and code.
The bank has since committed $1.15m in grants to Black-led partners, though many have criticised how small this commitment is relative to the size of the bank.
Greenwood’s name pays homage to the Tulsa, Oklahoma, district of Greenwood. It was known as “Black Wall Street” in the 1920s.
“In the Greenwood district, $1 recirculated 36 times in that community before it left it,” Glover explained earlier this year. Unfortunately, now in the African-American community, specifically, $1 only recirculates for six hours.”
A 1921 racially motivated riot saw Tulsa’s Greenwood district burned. It saw White residents kill as many as 300 Black people and left 5,000 homeless.
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