Can Technology Erase Inherent Bias in Banking? | Ep. 200

• Tiffany introduces the topic: online versus traditional banking and whether technology erases inherent bias. Markia Brown shares her background writing about this topic for Money Under 30.

A lot of people don't understand that there is a difference in the two and that the reason why online banking has become so popular is because people incorrectly assume... that the bias is kind of left out when it comes to online banking.

• Markia argues that online banking does not eliminate bias because the systems are created by people who carry unconscious biases that become embedded in algorithms and decision-making frameworks.

I don't think that online banking erases that inherent bias that's in the financial system.

• Tiffany shares the Harvard Implicit Bias Test link and recounts her own surprising results despite being 'blackity black, black, black.' She emphasizes that everyone has unconscious biases that affect decision-making.

• Harvard Implicit Bias Test

• As a 10-year banking veteran, Rakim shares how he was trained to scrutinize Black customers more heavily, including checking for 'iffy' checks and being more vigilant with cash denominations under the guise of due diligence.

When I saw a black person come into the bank, dressed a certain way, talking a certain way with a check that kind of was like a little iffy... I was programmed through the training to give them the side eye.

• Jonathan explains that online banks apply standardized hold procedures by law, removing the human discretion that could benefit qualified applicants. He notes that relationship-based decisions are impossible in purely digital environments.

All mobile deposits by law have standard hold procedures. Yeah, could they release it? Yeah, they could, but that's inherently going to put them more at risk.

• Rakim pushes back on Jonathan's operational focus, emphasizing that the discussion is specifically about how Black people experience bias, not just general banking procedures. He argues that equal treatment only occurs when everyone starts from the same position.

• Anthony shares that online banking made financial services less daunting for him and his generation. He discusses teaching his mother to use digital tools and notes that virtual banking reduces the feeling of being profiled.

It was a lot easier. It was less daunting for me to go inside the bank and didn't feel like I was being profiled the whole time.

• Om, from the fintech space, explains that money is a social construct with bias embedded at its foundation. He references a Federal Reserve study on credit card rewards disproportionately benefiting high-credit-score individuals, which maps to racial demographics.

• Markia asks whether Black-owned credit unions and banks can overcome inherent bias, or if the same systemic issues will persist even in self-created spaces. She probes what conditions would make these alternatives successful.

• Jonathan explains that banking regulations are strict regarding lending decisions. Even if an institution wants to help, they must follow legal requirements that sometimes force approval of loans that may not benefit the borrower.

• Rakim warns that without intentional cultural shifts, Black-owned institutions might simply replicate white supremacist capitalist systems 'in blackface.' He references 'The Miseducation of the Negro' as essential reading.

What could happen, what likely would happen... is that we would just create a carbon copy of what already exists in blackface.

• Anthony shares his personal practice of banking with a Black-owned institution for over two years and routing all business transactions through Black banks first. He emphasizes the importance of leaning into these institutions despite their growing pains.

• Jay argues that technology can eliminate some bias but warns that programmers' biases get encoded into algorithms and AI. He advocates for more diverse coders in STEM to address this issue.

There have been studies done that show just because they're trying to develop a system that levels the playing field, if they are writing the code that built in that or that includes that bias in there, you still kind of have to in some way overcome that.

• Maoli discusses the uphill battle of breaking barriers, including redlining practices, neighborhood branch placement, and the need for culture shifts. She emphasizes diversifying funds when testing new institutions and the urgency fintech adds to the timeline.