Is It Time to Retire the Race-Conscious Remedies Playbook? Reimagining Financial Inclusion in an Era of Backlash

Delicia Reynolds Hand is the Senior Director of Digital Marketplace at Consumer Reports and Of Counsel at Gilmore Khandhar. With 20+ years at the intersection of technology, policy, and social impact, she leads initiatives evaluating fintech apps and AI's impact on financial services while developing frameworks for responsible implementation. Delicia works with policymakers, industry leaders, and advocacy groups to advance human-centered digital transformation, focusing on expanding economic opportunity and protecting consumer rights. She's committed to leveraging technology for public good while mitigating risks. Delicia holds a JD from American University, an MA from Cambridge University, UK and a BA (Magna Cum Laude) from Saint Peter's University.

Financial inclusion stands at a critical juncture. Landmark laws like the Equal Credit Opportunity Act (ECOA) and the Community Reinvestment Act (CRA) aimed to combat redlining and discrimination. They significantly expanded credit access and community investment.

Yet, persistent gaps in financial outcomes between historically marginalized groups and their White counterparts remain. A 2022 Federal Reserve study found that the median wealth of White families was $188,200, compared to just $24,100 for Black families and $36,100 for Hispanic families.

Now, a recent executive order and other significant rollbacks of policies designed to prevent exclusion of historically marginalized consumers threaten to reverse progress. Invoking "equality of opportunity, not equal outcomes," the order directs agencies to deprioritize disparate impact liability — a legal theory holding actors accountable for practices that result in discriminatory effects, even if unintentional. It frames this as restoring "meritocracy and a colorblind society," casting race-conscious remedies as contrary to American ideals.

The truth is, even before this moment of backlash, traditional civil rights approaches had reached certain limitations. The persistence of stark racial wealth gaps despite decades of anti-discrimination laws demonstrate that existing frameworks, while necessary, have been insufficient. Now, this precipitous moment demands that we not only defend hard-won gains but also critically examine our own assumptions and strategies. If we're truly committed to equity, we must be willing to question orthodoxies and explore additional paths forward — not out of fear, but out of a clear-eyed assessment of what will most effectively advance justice in our current context.

The path forward requires three strategic shifts: adopting a 'yes, and' approach that deploys the full spectrum of equity-advancing tools — from race-conscious remedies to universal strategies — based on effectiveness rather than ideology; harnessing innovative design to embed equity into the fabric of financial systems; and summoning the courage to question legacy paradigms when they no longer serve our ultimate goal of genuine inclusion.

The Unfinished Promise of Landmark Laws 

In a nation still grappling with financial exclusion, ignoring disparities in outcomes entrenches inequity. Yet, defending past gains is insufficient when the promises haven’t been realized. The persistence of significant racial wealth gaps — with White families holding nearly six times the wealth of Black families as of 2022 - underscores the urgent need for targeted solutions. Meanwhile, the current backlash against identity-conscious approaches, coupled with shifting demographics and attitudes, exposes limitations of traditional civil rights strategies. The share of multiracial children has risen to 15.1% in 2023, and 61% of Generation Z believe increased diversity is good for society, reflecting a generational shift in perspectives on race.

Moreover, historically, race-conscious remedies, almost as soon as they are achieved, have continually faced fierce headwinds. Now, even acknowledging disparate racial impact is cast as divisive and unconstitutional. Further challenges, executive orders, and legislative rollbacks loom on the horizon. So, reimagining strategies is not just necessary, but urgent.

These trends don't negate the role of race in shaping outcomes or diminish the critical importance of race-conscious remedies. But they do compel us to consider complementary strategies for advancing equity in a context where the political support to sustain explicitly race-targeted policies may simply not exist.

We must confront an uncomfortable reality: race-conscious remedies now face systematic dismantling, not just political opposition. Federal agencies are actively directed to deprioritize disparate impact liability, and courts increasingly view race-based approaches with skepticism. This isn't a temporary headwind — it's a fundamental shift in the enforcement landscape that requires strategic adaptation.

Acknowledging this reality is not surrendering to it. The imperative to address systemic racism remains urgent, but when conventional advocacy tactics may accelerate rather than prevent backsliding, we must diversify our approaches. We can simultaneously defend traditional race-conscious remedies where viable while developing equity-advancing strategies through different frames. We can build coalitions around universal pain points while ensuring our solutions are designed with historically excluded communities at the center.

The challenge is to design an expanded repertoire of equity-advancing tools — one that includes both race-conscious and race-neutral approaches, and both targeted and universal solutions. Only such a revamped approach can navigate a landscape where the shared moral foundation for identity-based policies is eroding. It's a both/and proposition demanding ingenuity and resolve in the struggle for genuine inclusion.

The "Yes, And" Approach: Advancing Equity with Broad Political Support

In practice, this evolution requires adopting a "yes, and" mindset — one that affirms the ongoing necessity of race-conscious remedies, while also exploring race-neutral strategies that can advance equity along parameters with broad political support.

What might this look like? It could mean CRA modernization efforts that incentivize investment in underserved areas, small-dollar loan programs and fintech innovations that expand access to credit for thin-file consumers, or framing baby bonds as a birthright for all while highlighting how they can close the racial wealth gap. 

The key is to champion universal goals through rigorous, transparent data analysis that identifies where and how disparities exist. When we disaggregate data, we create the factual foundation for designing interventions that work effectively for all communities they aim to serve. A truly meritocratic system requires this level of transparency and evidence-based decision-making. 

A persistent fallacy in discussions of equity is the notion that expanding opportunity for historically excluded groups necessarily comes at someone else’s expense. While this zero-sum thinking might apply in limited contexts like competitive hiring, financial inclusion offers the possibility of expanding the pie rather than merely redistributing it. Two qualified loan applicants can both receive funding when we design systems that accurately assess risk and potential, rather than relying on proxies that entrench historical patterns of exclusion.

In practice, it's about adopting a both/and approach — one that marries targeted and universal strategies, toggling between race-conscious and race-neutral frames as context demands. It's about being principled in our goals, but pragmatic in our approaches. Financial institutions can build equity into their everyday operations through careful design choices, comprehensive data collection, and regular impact assessment — making inclusion an operational standard rather than a separate initiative. 

In a climate where race-conscious remedies face unprecedented challenges, advancing equity requires us to be clear-eyed about political realities while remaining unwavering in our commitment to meaningful change. We must demonstrate how universal access and opportunity strengthens our entire financial ecosystem while simultaneously using robust data to ensure progress reaches all communities. 

Harnessing Innovation for Inclusive Design

Emerging innovations offer promising pathways and new modes of inquiry to reframe financial inclusion as a universal imperative and potentially deliver on the promise of inclusion. What if, in addition to providing instant TILA disclosures at checkout, financial platforms offered real-time inclusion impact analyses? Rather than mandates focused solely on preventing discrimination, we could implement mandates designed to actively facilitate inclusion. At this moment, we all should be asking, what if? By designing products, practices, and policies that expand access and opportunity for all, we can meaningfully narrow gaps through facially neutral mechanisms that lift the entire community. 

We should also be encouraging the integration of culturally-rooted models, like lending circles and Islamic finance, with cutting-edge digital tools, using the scale allowed by technological innovation to deliver more options to and for communities traditionally excluded. By harnessing technologies like blockchain and AI to amplify and scale these community-driven solutions, while preserving their core ethos, we may be able to bridge the gap between localized empowerment and systemic change. This could involve creating digital platforms that enable communities to pool resources, share risks, and govern collectively, democratizing access to capital and decision-making power.

Another frontier ripe for exploration is the expansion of ownership and control in our financial system. Community wealth-building strategies like land trusts and cooperatives offer a glimpse of what's possible when economic power is widely distributed. But to truly move the needle, we need to think more expansively. What if we could leverage digital tools and policy innovations to create a new generation of public banks, sovereign wealth funds, and locally-controlled financing mechanisms? What if every community had the means to shape its own economic destiny?

Inclusive design, too, must evolve from a niche practice to an industry-wide imperative, with clear standards. This means moving beyond superficial adaptations to truly center the voices and experiences of diverse users in the creation of financial products and services. It means investing in deep, sustained community engagement — not as a one-off gesture, but as an ongoing partnership of co-creation and mutual accountability. And it means embracing a new standard of design integrity, where the goal is not just to expand access, but to actively identify and dismantle the barriers that have systematically denied it.

Forging a Path Forward in Uncharted Terrain

In this climate, standing for inclusion will require radical resilience and creativity. It will demand that we grapple honestly with the historical and ongoing realities of systemic barriers, even as we explore new frameworks for advancing equity that can resonate across lines of difference. 

In practice, this means leaning into local and private sector levers for change, focusing on universal pain points and aspirations while using disaggregated data to ensure equitable impact, and telling new stories that highlight the shared benefits of inclusion while never shying away from calling out injustice.

Most of all, it will require recommitting ourselves to the unfinished work of building an economy that works for everyone — even when that work puts us in the crosshairs. 

Conclusion: Towards a Strategy for Equity in a Shifting Landscape

We must reimagine our approach to financial inclusion for a new era. This is not a call to abandon the fight for racial equity, but to get creative and courageous in how we wage that fight in a moment of unprecedented challenges.

This approach will almost certainly ruffle some feathers and require hard choices. But the alternative — watching hard-fought progress dismantled while defending policies that haven't sufficiently moved the needle — is simply not an option. At the end of the day, financial inclusion is about results — ensuring that every individual and community has access to the tools and resources they need to thrive. If reaching that goal requires evolving our playbooks and questioning old assumptions, then that's what we must do.

The costs of division and exclusion are too high to continue with business as usual. By trying new things, learning as we go, and measuring our success by our impact, we can find our way to an economy and society that works for all.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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