Banks and tech companies fight for economic control

According to Mark Zuckerberg announcement Facebook’s rebranding to Meta, reports have said the tech giant is planning to open physical retail stores to showcase its new products. Meta needs people to try virtual reality helmets, gloves, and Clothes in order to to sell on Zuckerberg’s vision for the metaverse. This follows Amazon opening kiosks and retail stores a few years ago and recently announcing plans to open department stores. After forcing its window competitors bankrupt, Amazon is taking advantage of available real estate.

I was interested in the rush of tech giants to physical stores. For more than a decade I listened to the banks to justify close branches To cut costs by claiming that people prefer manage their money via computers and telephones. Online and mobile banking was supposed to be easier and more convenient, especially since everyone was supposed to have a high-speed internet connection. Technical engineers, bankers, economists and policy makers have encouraged us to accept the inevitability of digital banking and a cashless society with remarks such as “Who doesn’t want digital? and “No one goes to a bank branch anymore.”

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It is true that banks are closing their branches. Data from the Federal Deposit Insurance Corporation (FDIC) shows constant declines. Fourteen percent of branches firm between 2008 and 2020, a time when two severe economic recessions wiped out people’s wealth while ascend bank profits. The COVID-19 pandemic has haste this decline. At the start of the pandemic, branches began restricting walk-in activities and closing their lobbies, instead directing customers to ATMs and online and mobile platforms. Many branches closed permanently. But many people only grasp the reality of closed branches once they have already disappeared.

The boundaries between banks and technology companies are blurry. And that makes it all the more confusing that technology companies and banks both refer to customer preferences when justifying their differing business decisions regarding physical storefronts. Tech companies lack decline public confidence in retail banking institutions; however, they are delivery financial products and services over which banks have traditionally exercised exclusive control. As tech companies and banks increasingly share a customer base, apparent contradictions in companies’ decisions to open and close retail stores cannot be explained by industry shifts in people’s preferences or consumption habits.

Technology companies offer financial products and services over which banks have traditionally exercised exclusive control.

One answer is that the technology and finance industries are vying for control of new lands and manipulating their economies of scale to extract new forms of value. This extraction of value is based on and reifies a social construction racial hierarchy.

Since their creation, banks have account on a racial hierarchy to generate profits and accumulate richness. Like Angela Glover Blackwell and Michael McAfee write, “The banks have been the insurers of American racism.” The banks have financed the slave trade, funded local development to segregate cities, refuse affordable mortgages for black and brown borrowers, and accused Black and brown customers more for retail banking.

Banks regularly aggravate the racialized costs of the banking industry by refusing to make changes that would benefit their customers. For decades, banks have ignored people requests for the elimination of overdraft fee, free or low-cost checking accounts, and low-interest loans and mortgages that would have come at the expense of their bottom line. While some banks have framed their recent decisions to to cease overdraft fees in connection with commitments advance racial equity, these decisions coincide with competetion technology companies and threats federal regulation and oversight. In fact, retail banks to pass about $60 million a year on lobbying efforts to avoid demands from public decision makers forcing them to offer affordable products and services.

While banks often Claim a causal link between customer preferences for online and mobile banking and branch closures, we should acknowledge banks’ focus on customer preferences for the enlightenment that it is. Just because customers want online and mobile options doesn’t mean they want bank branches disappear of their communities, alongside their hospitals, pharmacies, and grocery stores. Yet banks are quick to accept a limited interpretation of customer preferences in order to justify their business decisions, acting only on those preferences that align with increases profits.

Branch closures increase the stakes on individuals to fund their own money management infrastructure: computers, phones and broadband. Broadband Internet is already privatized to a large extent. There are few public spaces where people can use open Wi-Fi without buying a cup of coffee first. Instead of a robust public infrastructure, we rely on private companies to sell us exclusive Internet access in our homes, without the guarantee of reliability, security or privacy.

By lacking this private infrastructure, the banks engage in digital redlining. Residents of black and brown communities are required to pay for the infrastructure to use and manage their money at a much higher rate than is required of residents of white communities. A recent report from the Brookings Institution find continued racial disparities in branch closures in Baltimore, Cleveland, Detroit, Pittsburgh, Philadelphia and St. Louis, even after taking into account banks’ avoidance of doing business in majority-black census tracts to begin with. These trends are also despite the fact that banks load lower rates for their products and services in white communities and that white communities are already funding more of their private infrastructure by having higher rates broadband the Internet within the home.

Locking in banking alternatives forces reliance on technology that helps in expanding the monitoring status disproportionately in black and brown communities. The prominence of tech companies in the virtual space, combined with the retreat of banks into the physical space, is creating new conditions for extractive finance and predatory surveillance. Like payday lenders and check cashers who to occupy communities exploited and abandoned by banks, technology companies capitalize on the vulnerabilities and absenteeism of our institutions.

Not only technology companies expansion in physical retail stores; they compete with banks in the delivery financial products and services, for example by providing current account and payment services and loan subscription. Financial products and services activities of technology companies to understand a growing share of their revenue – around 12% of revenue in 2019 among the biggest companies, including Amazon and Meta. And everything indicates that technology companies will continue to increase their revenues thanks to these activities.

From adopters modern technology monitoring, white communities on average welcomed retail banking and money management through online and mobile platforms. And, like some of the first to to receive tech companies’ new retail stores, white communities are at the forefront of acceptance monitoring and acquiesce in the loss of privacy at the expense of everyone else. Using their abundance of customer service data, Amazon made an entry into physical retail stores in 2017 by to acquire Whole Foods, a grocery store known for to take care of the preferences of its white, affluent clientele. Luxury clothing brands whose high prices inevitably narrow their clientele to whites and the wealthy have announcement plans to open retail stores in the metaverse.

In a generous interpretation, perhaps the surveillance that accompanies the adoption of modern technology does not yet make white communities feel like they are giving up privacy. White people are used to a level of intimacy that has never been Free black and brown people, low income women above all. Since they deliberately allow their privacy to be eroded, white people may doubt that they are suffering the negative consequences. Perhaps in a more honest interpretation, white communities are willing to subject themselves and other black and brown people to increasing levels of surveillance in exchange for perceived protection of their own privacy and property.

Strong regulation and surveillance that anticipates changing terrain and prohibits predatory surveillance is clearly needed. However, this has mostly been an inadequate strategy for building publicly accountable and racially just retail banking institutions. Private companies operating under racial capitalism have always been able to find regulatory loopholes, and the operations of tech companies are arguably much harder to police. scrutinize than retail banking institutions. Technology companies have already demonstrated agility in elude federal rules designed for retail banks, creating the possibility of similar terms that have plagued payday loans regulation for decades. And regulatory strategies have never fully corrected banks’ racial discrimination, which bodes ill since tech companies knowingly rely on racist practices. algorithms and Data.

As tech companies and banks move and maneuver the terrains of our economic society, we must decide what terms we are willing to accept for ourselves and impose on each other. And in a society where we are interconnected, these decisions are really two sides of the same coin. What might appear to be innocuous trends in branch closures and online and mobile banking are among growing virtual forms of extractive finance and predatory surveillance. We must fight claims that these tendencies are isolated and unavoidable; the stakes are too high.

Karl M. Bailey