Greenwood Bank Opens
According to a March 25, 2021 press release, "Greenwood, the digital banking platform for Black and Latino individuals and business owners..announced it has closed $40 million of Series A funding from six of the seven largest U.S. banks and the top two payment technology companies: Truist, Bank of America, PNC, JPMorgan Chase, Wells Fargo (Its still time to Clean House at Wells), Mastercard, and Visa."
The Greenwood online fintech platform (not a bank) officially opened its virtual doors for business on April 26, 2022.
The website notes that "Greenwood is not a bank. Banking services provided by Coastal Community Bank, Member FDIC. The Greenwood Debit Card is issued by Coastal Community Bank pursuant to a license by Mastercard International." It is significant to note that Coastal is not Black-owned, but they do have a significant social impact portfolio. We have no doubt that Greenwood attempted to enlist the aid of a Black bank, but, in addition to being small, Black banking institutions are notoriously conservative, and face a lack of fair regulatory support for such an effort. Another factor may be that Black-owned banks view Greenwood as a potential competitor, not a partner.
The platform (again, not a bank) may have the potential for elevated social impact in the Black community. Our Fully Adjusted Return analysis will describe this potential in more detail, but the platform indicates it will "donate the equivalent cost of 5 meals" to Goodr upon approval of a Greenwood account application. Goodr is an Atlanta, Georgia based food and anti-hunger program.
In addition, the platform offers other options for social impact, including the option "to add to your Greenwood Debit Card to the Greenwood Gives Back Program", which triggers the "choice to donate the change to either the National Association for the Advancement of Colored People (NAACP), United Negro College Fund (UNCF) or Goodr. For every person that opts into the Program, we round up the amount of Greenwood Debit Card transactions made using your Greenwood Debit Card feature in your Greenwood Spending Account to the next whole dollar amount (from $0.01 to $0.99), and transfer the amount in excess of the purchase price to a Greenwood Gives Back Service Account." Incorporating this type of round-up charity into the transaction stream is smart, and has the potential to lead to significant dollar contributions. One organization, Clay Electric, has a round up program that generates "an average of $75,000-80,000 a month. or more than $900,000 annually." The total impact depends on the social return generating efficiency of the recipient organizations, however.
Greenwood, thru Coastal, offers Direct Deposit, altho "availability depends on timing of payor’s payment instructions and fraud prevention restrictions.."
Overall, we believe this a significant and positive development in the Black banking/financial platform sector.