Digital redlining and the fintech marketplace: Evidence from US zip codes

The rise of digital technologies enables new manifestations of racialization in financial services with marketplace implications. Akin to redlining in the lending market, racialization in the spatial availability of digital technologies—including financial technologies or “fintech”—may raise the costs of banking in black and brown communities. This paper investigates associations between communities' racial makeup and rates of fintech by leveraging 2015 Esri Business Analyst Market Potential data from the universe of high‐poverty zip codes. Poor black and brown communities experience a form of digital redlining by having the lowest fintech rates. Every percentage increase in a community's black population was associated with an 18% decrease in their rate of high‐speed internet access, 1% decrease in smartphone ownership, 12% decrease in online banking, and 3% decrease in mobile banking. Relationships were opposite for communities with increasing white populations where whiteness attracts higher rates of fintech, even amidst high poverty.