Obsidian Banking’s cofounders Damon Kirk, CEO and Steven Farrar, CFO, are creating a financial services platform designed to advance financial literacy and wealth among Black communities across America. Meet the cofounders at MPC22 and learn more about their #MillionDoorsChallenge and transformative journey to a new era of inclusive banking.
Obsidian Banking, a fintech startup, designed a suite of banking and investment services created to decrease the racial wealth gap by helping Black millennials gain financial access. The Green Sheet spoke with Obsidian’s founder and CEO, Damon Kirk, who believes the path to financial literacy is paved with access and resources. Following are interview highlights.
What is your purpose and vision at Obsidian Banking?
Obsidian’s purpose is to fill the void left in Black America by traditional banks and financial institutions. Our vision long term is to be an all-encompassing bank for Black Americans, offering elite mobile banking, world-class investing, and equitable lending options.
What are your plans for launching Obsidian Banking and reaching your target demographic?
Obsidian plans to take an analog approach to a digital world by combining a grassroots financial wellness campaign with the technologies that will power tomorrow. With our #MillionDoorsChallenge, we will go door-to-door in Black communities offering financial literacy resources, including Bank of America’s Better Money Habits and easy-to-do summer business plans for kids, and converting people to our waitlist. We think being personal is the best approach, educating our community while building anticipation and gaining trust.
What problems do you plan to solve and what services and resources will you offer?
With 42 percent of African-Americans being underbanked and 66 percent not owning stock, our round-up feature gives our users the ability to invest with the swipe of a card. The total spending power of Black America is upwards of $1.6 trillion, an erupting demographic primed for the modern retail investing market. There is an estimated $200 billion in spending among the 7.3 million unbanked Black Americans, and simplifying banking and investing for them has potential to close the racial wealth gap in America.
What do you consider to be your primary differentiator?
Our primary differentiator is that we’ve built a product and experience with no compromise; a product that we can’t wait to use and can’t wait for the world to use! We’ve combined cutting-edge big data with the accessibility of fintech to turn Black America into modern investors.
What trends are you seeing in banking and how do you plan to leverage them?
Today, there are only 20 Black-owned banks that qualify as minority depository institutions, according to the FDIC. Between 1888 and 1934, there were 134 Black-owned banks. No Black bank currently manages over $1 billion in assets. The median wealth in Black households is expected to reach $0 by 2053 if the current trends continue.
A 2021 UC Berkley study says that Black households will either need 12.5 percent income growth, a 33 percent savings rate, a 6.4 percent capital gains rate, or a 75 percent rate of return to close the racial wealth gap in 30 years. The S&P 500 appreciates at a 7 percent annual rate of return. We plan to leverage this moment with a product that allows our users to get that 7 percent capital gains rate and close the gap.
What’s ahead on your near-term product roadmap?
Phase I of our product roadmap consists of a lean live beta of our banking app and investing platform. Phase II consists of a full live launch of our mobile banking app, offering checking accounts, debit cards with round-up investing utilizing our Erupt technology to leverage big data, automating your investments into the most preferred portfolios, and also an integrated BNPL solution powered by equipifi that extends offers in alignment with the user’s financial health.
What role will Obsidian Banking play in the future of fintech and banking?
Fifty-eight percent of Black Americans are 38 years of age or under. With our strategic partners and alliances, Obsidian is primed to be the bank of Black America for years to come. Over 60 percent of Black dollars go uninvested and are not funneled through the U.S. banking system. Giving our people this type of access now can not only help stop the drastic decline of Black wealth, but also lead to generations of financial growth.
This story originally appeared May 2, 2022, in The Green Sheet: http://www.greensheet.com/breakingnews.php?article_id=2696