Systemic racism and the digital equality opportunity

As I write, demonstrations continue around the country and show no signs of slowing. They have been for the most part peaceful and appear united in taking on systemic racism. 

I realize that some people take exception to the term systemic racism. I find it apt, but my goal today is not to argue terminology. There’s no denying that, on average, black people earn less, land fewer job interviews, are arrested more often, receive harsher sentences, and are more likely to be beaten and even killed by police than their white counterparts. Even when researchers take pains to control for extraneous variables, gross disparities remains evident. So, call it what you will—systemic racism or some other name—either way, it exists, and it must end.

The extent to which racism is conscious and overt versus unwitting and subtle is beyond the scope of this post. For now, suffice it to say that no one is immune. And that includes the banking industry. This has been demonstrated by notorious cases like this one in 2012, in which the government found 34,000 instances where a financial institution had charged … 

… African Americans and Hispanics higher fees and rates on mortgages compared with white borrowers with similar credit profiles, according to documents filed in the U.S. District Court for the District of Columbia.  

Or this, more recent civil action against Fannie Mae filed on behalf of the National Fair Housing Alliance and “twenty local fair housing organizations.” The suit alleges that Fannie Mae … 

… did not conduct routine maintenance and marketing of REO properties in predominantly African-American and Latino neighborhoods but did maintain and market its REO properties in predominantly white neighborhoods. According to the complaint, after conducting a lengthy nationwide investigation of over 2,300 Fannie Mae REO properties, Plaintiffs informed Fannie Mae of the details of their findings, but Fannie Mae refused to change its behavior. Fannie Mae’s actions, the complaint alleges, have had a significant harmful impact on neighborhoods of color throughout the country, threatening the residents’ health and safety and diminishing surrounding property values. 

Or this report, just six months ago, from the New York Times

… racism has been baked into the American banking system. There are few black executives in the upper echelons of most financial institutions. Leading banks have recently paid restitution to black employees for isolating them from white peers, placing them in the poorest branches and cutting them off from career opportunities. Black customers are sometimes profiled, viewed with suspicion just for entering a bank and questioned over the most basic transactions. This year, researchers for the National Bureau of Economic Research found that black mortgage borrowers were charged higher interest rates than white borrowers and were denied mortgages that would have been approved for white applicants. 

Nationally published newspaper columnist Leonard Pitts, Jr. put it quite succinctly in his excellent piece earlier this week: “… we process racism as a loathsome character defect, when really, it’s the water in which we swim.”

Clearly, the financial services industry has work to do.  

It won’t be easy. We’re talking about changing human attitudes and behavior, which is a never-ending battle. For proof, trace any social reform’s progress from its inception to the present. Note that I said “to the present,” not “to its attainment.” No group striving for equality has yet reached what could reasonably be deemed “attainment,” progress notwithstanding. 

But that’s no excuse not to try. 

Nor is an easy solution to be found in claims of alleging color-blindness, an empty claim at best. As Adia Harvey Wingfield wrote for The Altantic,  

Many sociologists … are extremely critical of colorblindness as an ideology. They argue that as the mechanisms that reproduce racial inequality have become more covert and obscure than they were during the era of open, legal segregation, the language of explicit racism has given way to a discourse of colorblindness. But they fear that the refusal to take public note of race actually allows people to ignore manifestations of persistent discrimination … 

… it is no longer socially acceptable in many quarters to identify oneself as racist. Instead, many Americans purport not to see color. However, their colorblindness comes at a cost. By claiming that they do not see race, they also can avert their eyes from the ways in which well-meaning people engage in practices that reproduce neighborhood and school segregation, rely on “soft skills” in ways that disadvantage racial minorities in the job market, and hoard opportunities in ways that reserve access to better jobs for white peers. 

How digital banking can hep lead the way

If innate bias is inevitable when humans meet face-to-face, what happens when you remove the faces?  

You can do that with a digital banking transaction. The meeting is not face-to-face but code-to-code. There need be no visual first impression. A digital transaction needn’t be racist, sexist, or anything else-ist. So it’s reasonable to hope that digital banking can rise above human bias. 

Yet reasonable though the hope may be, its outcome is not guaranteed. In a post easier this year, I pointed out that artificial intelligences (AIs) “… mine databases. If biases happen to be built into data-gathering processes—and not necessarily by design—AIs can hardly avoid emerging with similar biases.” I cited a Finextra report quoting Senior Reporter Madhvi Mavadiya, who, writing about gender and hiring practices, pointed out that “… technology can be as biased as humans if it replicates past hiring decisions and in the past, AI recruitment tools have realised that it discriminated against women because it attempted to find employees like its current workforce, namely, men.” The same can happen with respect to race.  

There’s a good chance that biases have already found their way into our databases. We need to root them out. 

Especially with the renewed attention that demonstrations are bringing to the issue, there’s no excuse not to redouble our efforts in purging bias from our digital transactions. While we wait for humans to catch up, digital can lead the way, even set the example, for fairness. 

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