There’s no denying we need financial systems to keep the world goin’ round. Access to capital supports the growth of resilient, placed-based economies. Ideally, these economies meet our basic needs, build wealth and social capital, work in harmony with our ecosystem, and encourage joy. But do our current financial systems work for us?
Financial Equity is Being Held Hostage
Since the first chartered bank was founded in America in 1791 through modern times, financial institutions have reinforced the ways in which businesses, families, and individuals could gain access to and utilize capital. It’s these institutions that historically and currently decide which individuals and neighborhoods will yield the best return and can secure loans to develop homes, business concepts and more. Our financial institutions hold the power to both segregate our communities and/or create opportunities for people and our places to thrive. This disparity is made all the more evident when we look at ownership (local v. national entities).
The 80+ banks based in Michigan hold only 20.35% of total deposits across the state. Most of Michigan's deposits reside in three nonlocal and large national banks (FDIC Deposit Market Share Reports, 2020). But why does this matter? BankLocal reports “big banks devote a sizeable share of their resources to speculative trading and other Wall Street bets that may generate big profits for the bank, but provide little economic or social value for the rest of us and can put the entire financial system at risk if they go bad.”
These large national banks use our dollars to reinvest in opportunities that often do not reflect community values, including private prisons and nonlocal ventures. They also contribute to practices such as redlining, which has thwarted the growth of generational wealth for far too long. Fortunately, there are solutions.
Local Banks and Credit Unions Work to Put People First
Local banks and credit unions (as entities that are grounded in the community and member-run) have the opportunity to connect with their stakeholders and customers directly. This means that they make decisions based on local needs and invest in people-first solutions. It’s our community banks, credit unions, CDFIs, and impact investing agencies that promote the growth of generational wealth. The United Nations Sustainable Development Goal to increase decent work and economic growth says that access to financial systems is key to promoting “development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises.” This means that your bank account can create (or take away) access to a small business loan that will employ your friends and family!
Not only does keeping your money close to home mean that we stop shooting our collective financial well-being in the foot, it means that you can take advantage of the same (or better) services at a lower cost alongside tailored customer service (Why bank local?). Local banks and credit unions can be part of the toolkit for driving change because they are more likely to listen to their stakeholders and more willing to be held accountable.
Keep Your Money Close to Home
Early on in the COVID-19 Pandemic, local financial relationships were crucial for the small, independently-owned businesses accessing CARES Act relief. The Institute for Local Self-Reliance reported that communities where small, local banks have a greater share of market assets were more successful at accessing Payroll Protection Program loans (compared to communities where big banks have the majority share). Consider this alongside the fact that community-based financial institutions make up 52% of all small business lending, despite holding only 16% of total assets nationally.
These small business loans act as an investment in place-based communities – growing our local economy, employing our residents, increasing wealth and social capital, and literally putting your dollars to work.
Moving your money to local financial systems allows your dollars to go toward improving the lives of the people around you by keeping more money in our communities (Local Works, Civic Economics). Your dollars recirculate in the community, create jobs, and build a stronger more resilient and sustainable economy.
MYM to Local Financial Institutions
Millions of Americans have turned to credit unions and other local financial providers for support throughout the pandemic. The ability to bank locally allowed the consumer to develop a personal relationship with their lenders. According to the Credit Union National Association, credit unions "continued to lend and even increased lending during... [the] current pandemic crisis" because their unique membership model puts people first. Without direct banking relationships such as these, small businesses had difficulty access CARES Act funding during the pandemic.
So why wait? Move your money to a local financial institution today! Follow these 7 Steps to Move Your Money:
- Open Your New Account
- Order New Check and an ATM/Debit Card
- Ask Your Employer to Reroute Your Direct Deposit
- Contact Companies that Direct Deposit Your Account
- Setup Online Bill Paying for Your New Account
- Close Your Old Account
- Enjoy Your New Local Banking Relationship!
Learn more about the community banks, credit unions, and other financial institutions in our community on the Local First Online Directory, BCorp Directory (search US Banks), and Move Your Money page.
Move Your Money is powered by:
- How Fair is Banking
- Broken Bootstraps
- The Economy that Slavery Built
- How is the City of Grand Rapids funded?
- FDIC Community Bank Study
- Fighting Monopoly Power
- How PPP is Failing America’s Small Businesses
- Why We Need Black-Owned Banks
- The Economic Benefits of Climate Action
- The Hidden Constitutional Costs of the Carceral System
- My Black Year: Maggie Anderson at TEDxGrandRapids
- Imprisoned for Profit
- TCF Merger
- Mazaska Talks