Combating systemic barriers with a neobank for Native Americans

When Amber Buker explains how she came to co-found a neobank for Native Americans, she tells the story of when she tried to apply for a deposit assistance program for members of his tribe.

It was in 2017, while she was working in Nashville, after graduating from law school in Portland, Oregon. There, she realized how far removed she and her family were from the traditional financial system, and set her sights on home ownership. But as a first-generation college student and the first in her family to buy a home, she didn't know where to start. Then his mother told him that their tribe, the Choctaw Nation, had a down payment assistance program that might be able to help him.

Buker found a description of the program on the tribe's website and quickly called customer service for assistance. Only, he was told that the advantage did not exist. So she called back and eventually found someone who could help her. However, the rules were so opaque that between the two of them, they couldn't determine if Buker qualified and what her next steps should be. Then she tried her mortgage broker, who wouldn't look into the problem. She ended up dropping out of the program, but eventually was able to buy a house.

This experience is one of the many reasons why, this year, she co-founded a digital bank run by Native Americans, for Native Americans. Called Totem, it aims to overcome systemic barriers to financial services faced by Native Americans, partnering with First Pryority Bank, a community bank in Tulsa, to act as a sponsor bank, holding Totem's deposits. "Our goal is to get more of our employees banked, help them build credit, and access tribal benefits that we believe will help build a new tradition of Indigenous wealth creation." , she says.

Neobanks are fintech companies that operate only online and do not have physical branches. Typically, in the absence of banking licenses, they work with regular banks as sponsors, allowing their customers' deposits to be FDIC insured. Many focus on specific communities, such as immigrants.

Unbanked and facing systemic barriers

Through his research, Buker found that approximately 16% of Native Americans are unbanked, mirroring research published in a 2020 FDIC report. This is the largest ethnic and racial group of unbanked people in the country, she says, a distinction that is the result of systemic barriers spanning generations. For example, Native Americans travel on average three times farther to get to a bank than other Americans, she says. They are also more likely to be invisible credit (no credit at all).

These are not the only obstacles. For example, people living on remote rural reserves likely lack mail-deliverable households. But banks generally do not issue debit cards to these consumers. Other issues: Many Native Americans have two-word surnames. Therefore, their names often appear differently on different reports. They also generally cannot use tribal registration cards to verify their identity.

Buker also found that 13% of its potential audience banked with a digital-only entity, but that service "didn't reflect their values," she says. The rest used community banks or credit unions, or large traditional players.

Amber Buker and Richard Chance

Totem

In fact, there are only 30 indigenous-owned banks in the country, according to Buker. They also tend to be small and lack the advanced technology that consumers expect. For most Native Americans who want to be able to use banking apps and other easily accessible services, she says, the only choice is a more traditional bank. "But I've heard time and time again that if you could provide me with all of that and I could bet on a place that matches my values ​​as an Indigenous person, I'd do it in a heartbeat," says- her.

Buker also determined that Totem could solve some problems unique to Native Americans. One was for employee benefit programs and services, like this down payment...