On the South Side of Chicago in the early 1970s, if you were black and poor, it was almost impossible to get a loan to start a business or buy a house. Most banks systemically denied credit in low-income neighborhoods. But a new local bank—founded by a group of activists—changed that, with a mission of becoming an agent of change in the community.
The bank, called ShoreBank, closed in 2010, a victim of the recession. But it later helped inspire a new tool called Mighty—a platform that will let any consumer learn which banks are creating the most social impact.
Cofounder and CEO Megan Hryndza learned about ShoreBank, and other mission-driven banks, while working on a documentary about community finance.
"As I got to work with some organizations that were working at the community level, I realized that their whole value proposition in banking was very different than anything I had ever heard or experienced," she says.
She also realized that consumers have an overwhelming number of options when they choose a bank but little to guide them in making a decision.
"It became clear that there were more banks out there than I had ever realized—over 6,000 banks," she says. "All of us have more banking options. So how do we discern between the options we have?"
A vast amount of bank industry data is available publicly, but it isn't easy to navigate. Quarterly reports on banks from the FDIC are 80-pages long. Meanwhile, the Federal Reserve offers reports on how every bank invests in lower-income neighborhoods. The Consumer Financial Protection Bureau has reports on where banks offer home loans.
Mighty's new platform, still in development, will sort through that data, along with other certifications (some banks, like the former ShoreBank, are official Community Development Financial Institutions, while others are members of the Global Alliance for Banking on Values or B Corporations).
The site will highlight banks that are doing the best work. On the beta version, the platform is currently building in data about City First Bank of DC, which lends money in low-income neighborhoods, and Southern Bancorp, a CDFI focused on communities in the mid-South.
Each bank will be presented in the context of the larger industry, so consumers can compare impact and think about how they want their own money to be used.
"We want to help bring forward the public understanding that money is in motion—it's not just behind lock and key," says Hryndza.
"Our inspiration is to create an experience where every individual who's participating has a personal understanding of their individual impact within the larger, complex system," she says. "And then can help facilitate a more participatory, democratic, diversified system."