Robinhood did something it’s never done before this month: the popular stock trading app stepped into politics, with a $500,000 donation to the NAACP Legal Defense Fund. I asked co-CEO Vlad Tenev about the donation, and he said it is an acknowledgment by Robinhood—which has long favored feel-good marketing gloss over real-world actions—of the urgency of civil rights issues in the wake of George Floyd’s death.
Robinhood’s decision also reinforces the widely-shared feeling that “something is different” right now. You can see it in the diversity and duration of recent protests, and in how corporate leaders are approaching hard questions about race.
Our boss at Fortune, Alan Murray, says the reaction of CEOs to George Floyd’s murder marks a sea-change from 1992, when the police beating of black motorist Rodney King touched off unrest across the country. As a business reporter back then, he found companies scrambling to have nothing to do with the controversy. Today, Alan says many CEOs are looking to lead on civil rights issues—a task that’s become more urgent in light of a dysfunctional political system in the U.S.
When it comes to banks, fintech companies and other pillars of the financial system, it remains to be seen just how much leadership they will show. Donations and statements decrying racism are commendable but they also risk diverting attention from harder questions about systemic discrimination in finance. These include how to address the legacy of mortgage redlining, which deprived many black families of an opportunity to build intergenerational wealth, and access to financial services today.
If you doubt there are disparities, think about the financial decisions that preoccupy many of us—what credit cards have the best rewards or which stock-buying app has the nicest interface—versus what is top of mind for communities of color. A recent McKinsey report, for instance, found that African-American communities have much less access to basic financial services like banking, but are overserved by expensive payday lenders. McKinsey argued that costs the average black American $40,000 over their lifetime, contributing to the country’s racial wealth gap.
This has led us to devote our next Brainstorm Finance conversation, which will be held online on June 17, to the experience of “banking while black.” We will be asking executives from banks, big fintech companies and startups about what the finance industry can do differently to ensure finance is fair and open to everyone. There are lots of other pressing questions in the world of finance right now—the improbable stock market rally, the risk of inflation, the future of crypto—but the most important one is about civil rights. Something is different now, and we should discuss it. Please reach out if you would like an invitation.
Jeff John Roberts