One of the first rules of business is that your product or service should fill a need. In the financial world, there’s a need for more banks that cater to Native American customers. Data from the Federal Deposit Insurance Corp. (FDIC) show that Native Americans are the most likely U.S. ethnic group to have no bank account, at about 16% of the population. Fewer than 1% of U.S. banks are owned by Native Americans.
Stepping in to help fill the void is Totem, a new bank co-founded by Native Americans Amber Buker and Richard Chance. Totem will offer mobile-only banking through an app, with plans to partner with sovereign tribal governments to deliver financial products and education to Native Americans.
The Tulsa, Oklahoma-based startup operates under the broad umbrella of neobanking, also known as “challenger” banking. These are essentially fintech firms that offer apps, software, and other technology, with no physical branches. They specialize in specific financial products such as checking and savings accounts, with backing from regular banks that act as sponsors, according to Forbes. This allows customer deposits to be FDIC-insured.
Totem is expected to roll out its mobile banking app in the spring of 2023. The app is being developed by Buker, a member of the Choctaw tribe, and Chance, a member of the Cherokee tribe. Totem expects to earn fees whenever its debit cards are swiped for purchases, with part of the money going to tribal partners.
Although the company was formed in mid-2022, it has already drawn financial backing from a variety of sources. In November, it announced that it raised $2.2 million in a pre-seed funding round led by Raven Indigenous Capital Partners, a Canadian firm that invests in Indigenous social enterprises. Other investors included the Alloy Alchemist Fund, Debut Capital, Ruthless for Good, and the Candide Group.
In an interview with Tribal Business News, Buker called the pre-seed round a “huge milestone” for Totem.
“[Investors] found something unique enough in our model to want to back it at a time when a lot of other digital banks are having a lot of trouble raising funding,” Buker said. “We feel that’s really an endorsement of the strength of our business model that we were able to raise a round.”
The capital was mostly raised from organizations in the impact investing space who “naturally just understand our value proposition a little bit more,” she added.
Totem also received a $125,000 grant from Amazon Web Services as a part of its Impact Accelerator for Women Founders, which selected 25 women founders out of thousands of applicants.
The idea for a Native American neobank came in 2017, when Buker was working in Nashville, Tennessee after graduating from law school in Portland, Oregon. She tried to buy a house near Nashville but didn’t have enough money for the down payment. Her mother suggested that she contact the Choctaw tribe to see if it could provide any help.
“I called up the tribe and the person on the other end of the line had no clue,” Buker told The Financial Brand in an interview. “I ended up calling around and leaving voicemails for all the wrong people for over a week. Finally, I talked to someone who knew about the program, but she couldn’t explain it that well. Between the two of us, we couldn’t figure out if I qualified and what the next step was.”
The frustration of that experience – coupled with Buker’s introduction to digital banking while working for Alloy Labs Alliance, a fintech/bank innovation lab – convinced her that the same technology could be used to create a bank for Native Americans.
“We were at a point where technology had reached
the level of ubiquity and affordability that would permit me to build the kind of bank I had needed,” she said.
Buker heads up Totem as CEO, while Chance serves as Chief Technology Officer. Neither belongs to a tribe that includes totems in their cultures, but the two wanted a bank name that would make a broader connection to Native Americans.
“Totems from cultures around the world tell the stories of the people they represent,” Buker said. “And that’s what we want to do with Totem as a company — help our people rewrite the assumed narrative around Native Americans’ relationship with money.”