Banks and tech companies jockey for economic control

After Mark Zuckerberg announcement rebranding from Facebook to Meta, reports said the tech giant was 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 the opening of kiosks and retail stores by Amazon a few years ago and recently. announce plans to open large stores. After forcing its competitors into the window out of business, Amazon is taking advantage of available real estate.

I was interested in the rush of tech giants to physical stores. For over a decade I listened to the banks to justify branch closures in To cut costs by pretending that people prefer to manage their money through computers and phones. Online and mobile banking were supposed to be easier and more convenient, especially since everyone was supposed to have a high-speed internet connection. Technical engineers, bankers, economists and policymakers have encouraged us to embrace 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 the banks are closing their branches. Federal Deposit Insurance Corporation (FDIC) data shows constant drops. Fourteen percent of branches firm between 2008 and 2020, a time when two serious economic recessions annihilated the wealth of people while ascend banking profits. The COVID-19 pandemic has haste this decline. At the onset 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 after they have already disappeared.

The boundaries between banks and tech companies are blurry. And that makes it all the more confusing that technology companies and banks both refer to customer preferences to justify their competing business decisions regarding physical storefronts. Tech companies don’t have the decline public confidence in retail banking institutions; however, they are deliver financial products and services over which banks are used to having exclusive control. As technology companies and banks increasingly share a customer base, the apparent contradictions in the decisions of companies to open and close retail stores cannot be explained by changes within the industry in people’s preferences or consumption patterns.

Tech companies offer financial products and services over which banks are used to having exclusive control.

One answer is that the tech and financial industries are fighting for control of new lands and manipulating their economies of scale to extract new forms of value. This value extraction is based on and reifies a socially constructed 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, “Banks have been the guarantors of American racism.” Banks have funded 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 worsen the racialized costs banks by refusing to make changes that would benefit their customers. For decades, banks have ignored people requests for the elimination of overdraft fees, free or low-cost chequing accounts, and low-interest loans and mortgages that would have been detrimental to their bottom line. While some banks have formulated their recent decisions to to cease overdraft fees in connection with the commitments of advance racial equity, these decisions coincide with competetion technology companies and threats federal regulation and oversight. In reality, retail banks to pass about $ 60 million a year on lobbying efforts to avoid demands from public policy makers forcing them to offer affordable products and services.

While banks often have Claim A causal link between customer preferences for online and mobile banking and branch closures, we should recognize the focus by banks on customer preferences as the lighting 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, pharmacy, and grocery stores. Yet banks quickly accept a limited interpretation of customer preferences in order to justify their business decisions, acting only on preferences that align with increases profits.

Branch closures increase the stakes on individuals to fund their own money management infrastructure: computers, phones and broadband. High speed internet is already privatized to a large extent. There are few public spaces where people can use open Wi-Fi without first purchasing a cup of coffee. 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 confidentiality.

By lacking in this private infrastructure, banks are engaging in digital redlining. Residents of black and brown communities are required to pay for infrastructure in order 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 Racial disparities persist in branch closures in Baltimore, Cleveland, Detroit, Pittsburgh, Philadelphia and St. Louis, even after taking into account that banks shy away from doing business in majority black census tracts to begin with. These trends are also despite the fact that banks load lower prices for their products and services in white communities and that white communities are already more funding their private infrastructure by having higher rates high speed the Internet within the house.

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

Not just tech companies expansion in brick and mortar 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 product and service activities of technology companies to understand a growing share of their revenue – around 12% of revenue in 2019 among the largest companies, including Amazon and Meta. And everything indicates that technology companies will continue to increase their revenues through these activities.

From adopters modern technology surveillance, white communities have on average hosted retail banking and money management through online and mobile platforms. And, like some of the first to to receive new retail stores of tech companies, white communities are at the forefront of acceptance surveillance and accept 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 in to acquire Whole Foods — a grocery store known for catering to the preferences of its white and wealthy clients. Luxury clothing brands whose high prices inevitably reduce their clientele to whites and the rich 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. Whites are used to a level of privacy that has never been Free blacks and browns, low income women above all. As they willfully allow their privacy to be eroded, whites may doubt that they will suffer any negative consequences. Perhaps in a more honest interpretation, white communities are prepared to submit, along with other blacks and browns, to increasing levels of surveillance in return for the perceived protection of their own privacy and property.

Strict regulation and surveillance that anticipate changing terrains and prohibit predatory surveillance is clearly needed. However, this is primarily an inadequate strategy to create 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 more difficult to find. scrutinize than retail banking institutions. Tech companies have already shown agility to to evade federal rules designed for retail banks, creating the potential for similar conditions that have affected payday loans regulation for decades. And regulatory strategies have never completely corrected the racial discrimination of banks, which does not bode well since tech companies knowingly rely on racist rhetoric. algorithms and The data.

As tech companies and banks change and manipulate the terrains of our economic society, we must decide on the terms that we are willing to accept for ourselves and impose on each other. And in a society where we are interconnected, these decisions are truly two sides of the same coin. What may appear to be harmless trends in branch closures and online and mobile banking are among the growing virtual forms of extractive finance and predatory surveillance. We must reject claims that these trends are isolated and inevitable; the stakes are too high.

About Kevin K. Zuniga

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