Digital Redlining in the Fintech Marketplace: Evidence from U.S. Zipcodes
Terri Frieldline, Associate Professor, School of Social Work
Financial technologies—known as “fintech”—are arising as a mechanism for expanding access to financial services amidst banks’ parallel trends of shuttering brick-and-mortar branches and shifting product and services delivery to online and mobile platforms. These trends have potential to amplify the existing racialized geography of financial services in the United States and to exacerbate consumers’ marginalization from the financial marketplace. Leveraging 2015 Esri Business Analyst Market Potential data from the universe of high-poverty zip codes, this paper investigates associations between communities’ racial makeup and rates of fintech. Poor Black and Brown communities experience a form of digital redlining by having the lowest fintech rates. For example, every percentage increase in a community’s Black population was associated with an 18% decrease in their rates of high-speed internet access, 1% decrease in smartphone ownership, 12% decrease in online banking, and 3% decrease in mobile banking. The relationships were opposite for communities with increasing White populations where—even amidst high poverty—Whiteness attracts higher rates of fintech.