Understanding Racism in Canadian Banking and Its Impact on Communities

Racism in Canadian banking is a reality that many people face but few openly discuss. It affects access to financial services, wealth building, and economic opportunities for racialized communities. This post explores how systemic racism shows up in banking, the consequences for affected communities, and what steps can help create a fairer financial system.

Bank entrance in a diverse Canadian neighborhood

How Racism Manifests in Canadian Banking

Racism in banking is often subtle but persistent. It can appear in several ways:

• Loan approval disparities: Studies show racialized applicants face higher rejection rates or receive less favorable loan terms compared to white applicants, even with similar financial profiles.

• Limited access to credit: Some communities, especially Indigenous and Black Canadians, experience difficulty obtaining credit cards, mortgages, or business loans.

• Discriminatory customer service: Racial profiling and bias can lead to poorer treatment or assumptions about financial behavior.

• Branch locations and services: Banks may have fewer branches or ATMs in neighborhoods with higher populations of racialized groups, limiting access to in-person services.

  
  

For example, a 2020 report by the Canadian Centre for Policy Alternatives found that Black Canadians were twice as likely to be denied mortgages compared to white Canadians. This gap restricts homeownership and wealth accumulation.

The Impact on Communities

The effects of racism in banking ripple through communities in many ways:

• Wealth inequality: Difficulty accessing loans or mortgages slows wealth building, contributing to the racial wealth gap.

• Business challenges: Entrepreneurs from racialized groups may struggle to secure startup capital, limiting job creation and economic growth in their communities.

• Financial exclusion: Limited access to banking services can push people toward costly alternatives like payday loans or cheque-cashing services.

• Mental and emotional toll: Experiencing discrimination in financial matters adds stress and reduces trust in institutions.

  
  

These barriers reinforce cycles of poverty and limit opportunities for future generations. For instance, Indigenous communities often face both geographic and systemic barriers to banking, which hinders economic development on reserves.

ATM machine in a culturally diverse Canadian neighborhood

Steps Toward Change

Addressing racism in Canadian banking requires action from multiple angles:

• Data transparency: Banks should collect and publish data on loan approvals and service outcomes by race to identify disparities.

• Bias training: Staff need ongoing education to recognize and reduce unconscious bias in customer interactions and decision-making.

• Community partnerships: Collaborating with local organizations can help banks design products and services that meet the needs of racialized groups.

• Inclusive hiring: Increasing diversity within banks’ leadership and staff can improve understanding and responsiveness.

• Policy reforms: Government regulations can enforce fair lending practices and require accountability.

  
  

Some banks have started initiatives to support Black and Indigenous entrepreneurs through targeted loans and financial literacy programs. These efforts show promise but must expand and deepen to create real change.

What Individuals Can Do

People affected by these issues can take steps to protect their financial health:

• Know your rights: Understand anti-discrimination laws related to financial services.

• Shop around: Compare offers from different banks and credit unions.

• Seek support: Use community organizations that provide financial advice and advocacy.

• Report discrimination: File complaints with banking regulators or human rights commissions when unfair treatment occurs.

  
  

Building financial knowledge and networks can help overcome some barriers, but systemic change is essential for lasting equity.