Native Americans are the most likely group to be unbanked in the U.S., according to a Federal Deposit Insurance Corporation (FDIC) survey, and many lack access to banking services and ATMs. Native American-owned banks and credit unions help address this issue by providing financial services to Native American communities.
While anyone can bank with a Native American bank or credit union, these institutions aim to serve and empower Native American individuals. To qualify as a Native American bank or credit union, these institutions must either be majority-owned by Native Americans or have a board of directors that’s majority Native American.
What Is a Native American Bank or Credit Union?
A Native American bank or credit union is a type of minority depository institution (MDI) that’s majority-owned by Native Americans or has a board of directors that’s majority Native American. These banks and credit unions also primarily serve Native American communities and seek to provide their customers with affordable and accessible banking services and products.
As MDIs, Native American banks receive assistance from the government to operate, particularly technical and management assistance. Banks are for-profit institutions, whereas credit unions are member-owned organizations.
Why These Institutions Are Important
Native American-owned banks help equip American Indian and Alaska Native communities with financial education and empowerment. As mentioned, Native Americans are the most likely group to be unbanked, meaning it’s difficult for many people and businesses to access checking andsavings accounts, loans, mortgages, credit cards, and other financial services.Online bankingisn’t necessarily a solution, since not all tribal residents have access to broadband.
Lack of access to banking also impacts people’scredit scores. A poor or nonexistent credit score makes it even harder to access affordable loans. Native American banks and credit unions can help combat these problems and connect people with affordable products and the opportunity tobuild their creditworthiness.
Minority Depository Institutions (MDIs)
Native American-owned banks and credit unions are a type of MDI, which are institutions that are majority-owned or governed by people of color. MDIs came into being with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
To be designated as an MDI, the bank must have more than half of its voting stock owned by minority individuals (Black, Native American, Hispanic American, or Asian American individuals). Alternatively, it must have a Board of Directors where the majority of people are minority individuals and predominantly serve minority communities.
Federally designated MDIs receive government assistance, such as technical, training, and education programs, and preservation of minority ownership in the case of a merger or acquisition.
Community Development Financial Institutions (CDFIs)
Similar to MDIs, community development financial institutions (CDFIs) have a mission to support economically disenfranchised communities. They support community development by providing financial services, loans, investments, training programs,minority-owned businesses, and other development efforts.
Along with providing banking services to underserved communities, CDFIs often run microloan programs to help small business owners launch and grow businesses. They may also providesmall business grants for minoritiesor fund affordable housing and community facilities.
Active Native American-owned Banks and Credit Unions
The FDIC maintains a list of Minority Depository Institutions. Here are some of the active banks that are Native American or Alaskan Native American owned.
TheNational Credit Union Administration(NCUA) maintains a list of credit union MDIs. Here are some of the Native American credit unions active today, including their state, total, assets, and total members.
(Learn more: Personal Loan Calculator)
Supporting Your Local Financial Institutions
Anyone can bank with a Native American-owned bank or other MDI. These institutions are committed to supporting communities that have historically been excluded from mainstream banking services.
By banking with an MDI, you can help support its mission and community. Keep in mind, though, the differences betweenbanks vs. credit unions. While almost anyone can open an account with a bank, credit unions have specific membership requirements. You might need to live in a certain area or work for an eligible employer to join.
The Takeaway
Native American-owned banks and credit unions serve traditionally underbanked communities and help equip people with financial self-sufficiency. While these banks primarily serve indigenous communities, anyone can join these or other minority-serving institutions to support their mission.
This article originally appeared onSoFi.comand was syndicated byMediaFeed.org.
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