Minnesota’s first-ever black-owned full-service bank opened for business this week, marking a state first with some of the the worst racial wealth inequality in the country.
In an effort to reach unbanked and underbanked communities, the brand new Detroit branch First Independence Bank opened in a the former Wells Fargo building located at 3430 University Avenue on Tuesday, April 26.
It took a concerted effort from banking competitors to bring the new bank to the cities.
A conversation between banking executives and the First Independent Bank began after the murder of George Floyd, said Damon Jenkins, regional site manager for First Independence Bank. Leaders wanted to make a difference in their community, even if it meant helping a competitor enter the market.
Wells Fargo donated its former space to a nonprofit Project for the pride of living, who then leased it to First Independence Bank. Local economic development group Superior MSPas well as Bank of America, Bremer Bank, Huntington Bank and US Bank also provided research, capital and marketing support to bring the new bank to the region.
Through these partnerships, First Independence customers will also have free access to 55,000 ATMs operated by Bank of America, Bremer Bank, Huntington Bank, US Bank, JP Morgan Chase and Wells Fargo.
The new bank is looking to internal and community partners to find ways to help unbanked and underbanked populations.
Unbanked populations include people who have never had a bank account or interacted with a bank, Jenkins said. Underbanked populations may have a bank account but are not surrounded by financial coaching, literacy, and development that ultimately leads to the opportunity for things like home ownership.
A lack of access to banking services and the tools that come with it drives homeownership inequities that persist across the country, but are particularly prevalent in Minnesota, Jenkins noted.
While nearly 77% of white households in Minnesota own their homes, that number is 60% for Asian households and less than 50% for Native American and Latino households. according to the Federal Reserve Bank of Minneapolis. For blacks in Minnesota, it’s even lower: 25%.
There is also a stark difference in the average credit score between predominantly white neighborhoods and neighborhoods of color, according to a study conducted by the Brookings Institution. In Minnesota, the average credit score for predominantly white neighborhoods is above 725. The average credit score for non-white ZIP codes is 570.
The Minneapolis bank plans to offer a program called Operation HOPE, a resource currently offered in its Detroit location that provides financial literacy and credit repair counseling with the goal of getting people’s credit to a FICO score of 700. It will also help people become homeowners, Jenkins said .
Jenkins, a Minneapolis native and self-proclaimed “banker by accident,” says watching people experience “firsts” fueled his passion for banking. He said he was delighted to share his first banking experiences with the community in his new role.
“I’m lucky to be part of a lot of firsts in my career, whether it’s your first bank account, whether it’s your first time going to college because you were able to get a loan to pay school fees, whether it’s your first car purchase, whether it’s your first credit card, first time owning a home, first time starting a business , etc.
Although First Independent is black-owned, executives want to make it clear that it is not a black-only bank. The company also needs the support of the white community. This includes customer acquisition and the pursuit of community partnerships.
When the bank began the process of launching this first branch in Minnesota, bank leaders engaged with community leaders, including clergy and nonprofits, creating a group of ambassadors and stakeholders to hear from the community what their needs are. They plan to continue this work through partnerships like Project for Pride Living (PPL), with Urban Leagues, the North Side YMCA and Habitat for Humanity.
Kenneth Kelly, President and Chief Executive Officer of First Independent Bank, said of of nearly 5,000 banks across the country, only 17 are black owned and controlled. There are only 150 minority-owned banks across the country. First Independence Bank is the 7th largest black-owned commercial bank in the United States.
Kelly commends Twin Cities banking executives for examining themselves and the disparities that exist in their own industry. Helping to increase competition in a region is “unprecedented”, he said.
“Bringing us here is a great way to demonstrate inclusion but invite a competitor into the market, helping to elevate this topic in the direction of home ownership, restoring credit and of equality,” Kelly said. “It’s a model we should consider replicating or encouraging others to replicate across the country where we see these disparities.”