There's earnest business afoot in the Hub these days as a former executive at the nation's largest African-American-owned bank gets ready to launch an online-only bank out of Boston to court affluent black customers. The plan marks an interesting departure from traditional notions of banking in the African-American community and highlights the Internet's ability to target markets that remain undeservedly underserved.
BankBlackwell, with its homepage urging viewers to "invest in the first-ever African-American direct community bank," was launched in October 2003 by James R. Mundy, a former top executive at Los Angeles-based OneUnited Bank. It is making news now because the Office of Thrift Supervision granted preliminary approval for the bank to start doing business.
The bank says its services will include banking by phone and mail as well as the Internet, along online loan applications and electronic tithing services for faith-based organizations. One interesting note: The bank is not intended to be a customer's sole financial institution. Rather, it is intended to supplement an existing checking account. "This allows customers to avoid the difficulties of changing banks and to keep the convenience of ATM networks offered by traditional brick-and-mortar banks," the Boston Globe reported earlier this week.
The company is offering 1.6 million shares at $10 each with a minimum purchase of $1,000. BankBlackwell's full services will go online this summer if it raises the full $16 million. So far, the Globe reported, it has raised $860,000. The Boston Business Journal said the bank plans to target households with incomes of more than $50,000 per year.
The bank expects to tap a market with growing spending power, but one that suffers from limitations that other groups don't. "BankBlackwell says in its filing ... that African-American banks -- unlike Hispanic and Asian banks -- have had relatively limited reach and not one African-American banking institution currently has assets exceeding $1 billion. The bank says the buying power of affluent African-Americans is expected to grow to $921 billion in 2008," the Globe reported. "According to U.S. Census figures, African-American households earning more than $50,000 grew to 4 million in 2002 from 766,000 in 1970."
The Associated Press carried a story on the bank, reporting that it "is believed to be the first black-owned bank to secure a federal banking charter since New Orleans-based Dryades Savings Bank was chartered in 1994, and will join just 47 black financial institutions operating as of last September, according to federal records. Those banks hold just $5.7 billion in assets, compared with $104 billion at the nation's 36 Hispanic-owned banks."
Using the Internet as its sole platform will help the bank establish universal appeal among black customers, one possible investor told the newspaper: "'It's an interesting way to get past the traditional brick-and-mortar localized banks that have focused on African-American communities,' [said] Winston Henderson, vice president of Surface Logix, a drug development company in Brighton. 'The Internet allows you to reach African Americans who have moved from urban areas and provide the most sophisticated services that more affluent African Americans may desire.'"
Ads Fit to a T
Another story out of Boston really does focus on an underserved market, if you take the word "under" literally. Officials for the Massachusetts Bay Transit Authority plan to set up a close-circuit television network on the T. The Globe said the plan calls for the TV sets to be installed in subway cars on the Red, Orange and Blue lines in the hopes of pushing ads at riders to generate $3.5 million a year.
"The T faces intense pressure to generate revenue and avoid steep fare hikes. The authority is strapped with the highest debt load of any transit agency in the nation and faces a $10 million deficit in the fiscal year that begins July 1," the Globe wrote. "In addition, T officials are expecting a decline in revenues from the system's more traditional advertising placements -- on bus shelters, in stations, and on electronic message boards."
The cool part, technologically speaking, is that the audio -- if you want it -- would be made available on FM radio and FM-ready cellphones. The Globe also reported that Orlando, Chicago and Milwaukee use even more sophisticated advertising on their bus routes, where ads for businesses along the routes pop up as people pass by their physical locations. It's great to have a captive audience, but even trapped subway riders have an option, as 37-year-old Darrell Murphy told the paper: "I'm too busy resting my eyes in the morning going to work, and I'm too busy sleeping on the way home to notice."