On January 28, Arlo Washington, founder of the People Trust Credit Union and subject of the Oscar-nominated documentary The Barber of Little Rock — which details his work and its impact on his community — spoke at Lakeside to the Middle and Upper School students, delivering the Mark J. Bebie ’70 Memorial Lecture. He also gave an address in the Chapel later that evening that was open to all members of the Lakeside community and attended by parents, guardians, and faculty alike. In his Upper School lecture, he spoke with unhurried precision to the pillars of good character, what it means to have integrity, and the importance of treating others around us with care, with his clever sayings and wise words of advice eliciting collective murmurs of approval and appreciation that filled the gymnasium. Tatler had the opportunity to sit down with Mr. Washington for a brief 20-minute conversation to learn more about his work, experiences, and insights. 

Oliver T. ’28 (OT): To start off, you started cutting hair and opened your first barber shop at just 19, using student loan money in a time of personal hardship. How did those early experiences shape your view of entrepreneurship and community support?

Arlo Washington (AW): When I started at 19, I had a hope and a dream, but I didn’t have the money. My thing has always been to be able to create opportunities: not just for myself, but for my younger sisters, … my community, and when I got that $1,750 student loan check, I had a lot of my classmates that were taking the money and going and buying cars, or doing different things. And I was looking at that check walking down the street, and I said, “You know what? I need to do something with this. This is all I have to my name. Let me do something where it can continue to generate income.” So I took 1,750 bucks, I went to Home Depot, and I bought countertops that I would hang on the wall at stations, plant hooks on the side that I could hang the clippers on, and painted them red so they would have a little bit of color, and I got a lease on the building. This was 20 some years ago, so of course, things cost a lot more today. But I stretched that $1,750 out, and my customers that I had at the time, they would stay up late nights with me, and we would lay tiles down, so that the barber shop had a floor. We converted an old church into a barber shop, and after I would cut my customer’s hair, they would tip me $100 just to help me with the business. So that showed me that if you believe in something, then the others will believe in it as well. Especially when it’s something positive. 

OT: Absolutely. I wanted to touch on your childhood — early on in your life, you experienced the loss of your parents, how did this grief and loss shape your character for the rest of your life? 

AW: Losing a parent is something that I can’t really explain. You have to experience it to understand what that feels like. And one of the things I felt when my mom passed away was my heart being ripped out of my chest, so I felt it definitely centered me and made me understand the value of life. 

OT: Going back to the idea of supporting the community financially — you touched on this in your address, but was there a specific moment when you knew that this was what you wanted to do? 

AW: Yeah, that’s a great question. When you think about holistically supporting underserved communities, as a barber college, I can train somebody how to be a barber, but I can’t provide them with housing support. I can’t provide them with food. I can’t provide them with transportation. There’s so many challenges when you think about, holistically, the things that are happening to vulnerable populations, and I wanted to be able to solve all of it. As a loan fund, we weren’t able to take deposits, so it still left a gap. When you think about the site and the full circle of settlement, a depository bank or credit union still needed to be established there. We also noticed that with the paycheck protection program, a lot of banks were not open to small businesses having checking accounts, so a lot of the businesses couldn’t access the critical resources of that program because they didn’t have a checking account. And oftentimes, the requirements for getting a checking account are really high. You have to have a certain balance in an account in order to be able to qualify, or else you are stuck using an online platform to be able to access the financial system. We wanted to be able to holistically provide a solution for community members by offering them not only access to credit, but also a place to store their value. 

OT: That makes a lot of sense. What was the “aha moment” that you had when you realized the community needed access to financial services beyond loans and what inspired you to create the People Trust Credit Union? 

AW: Well, when you think about that, in 2009, there were 134 brick-and-mortar payday lenders operating in the state of Arkansas. Our legislators came together and created a lot of predatory payday lending because the payday lenders were charging high interest rates and preying on low- and moderate-income community members. Those members couldn’t access traditional finance because they didn’t have the credit, but there were no stores that sold credit. So that left people locked in a position where they couldn’t improve their financial wellbeing. We wanted to be able to start reporting credit to the credit bureaus on small-dollar loans — charge low interest rates, offer a safer alternative to be able to improve their financial lives, and then move them on to more mainstream finance. The crediting allowed us to be able to provide people with the tools, financial literacy, and technical assistance they need, if they want to start a business. A lot of people have good dreams and goals and hopes are out there, but then they don’t know what the business formation documents are. Proof of concept — you have an idea, but is it an idea that is scalable? Does it make sense? Is it something that you just love to do, but it doesn’t make any money? We help entrepreneurs talk through their ideas and serve as a sounding board. A lot of times, entrepreneurs don’t have that. And, the bank doesn’t have the time or the patience, or may not see a profit in these individuals to invest that type of time. So, we provide a financial solution for the community, and because we’re part of the community and we emerged from an unmet credit need, we have the bandwidth to provide those supportive and developmental services.

OT: Building off of that, how do you evaluate who to give out loans to? What does your criteria look like? And how have you built up that trust in your community? 

AW: There were no credit stores, so people were locked into low credit scores, then credit files, and they couldn’t access credit because it takes credit to get credit. So what we would do is  provide these small-dollar loans, and we’d report those small-dollar loans over a short period of time to the three major credit bureaus, and then what that would do is it would allow them to build a credit profile. Maybe they’d come and they’re credit-invisible, and they need to be able to establish a credit profile. Then what we would do is use an alternative credit scoring model, a decision engine. We have a system that has a built-in decision engine with criteria based on tiers — how much you get and what else is needed to approve your loan. Once people come to the website and they go to the platform, they put in their information and income. We look at cell phone bills to make sure they’re paying their cell phone time. We look at any creditor that they may have that may not be reporting credit that can get information from us saying, “Hey, they’ve been making their payments,” and we use alternative data to score an application. 

OT: Mr. Washington, your work directly addresses the racial wealth gap and financial exclusion. What do you see as the biggest misconceptions about wealth inequality and access to banking in underserved neighborhoods? 

AW: The biggest misconception is that everybody has access, because the truth is not everybody has access, and they don’t have access because of their geographical location or because of fear and insecurity. Nobody likes to be rejected. If people feel like when they walk into a bank and want to open an account, they’re going to get looked down upon because of their economic status, then they tend to not even ask the question or to not even approach the situation, and just avoid that responsibility of managing their finances.

OT: What does having financial dignity mean to you?

AW: It’s a sense of pride. When you think about your health being directly tied to your financial well-being, it determines if you can afford the medicine, if you can afford the quality of food that it takes to be healthy. Money affects more than your bank account. It affects your emotional stability — things of that nature. 

OT: You’ve spoken a lot about your work to provide financial assistance to underprivileged community members. My question is: how does our country need to shift, both politically and economically, to better meet community needs? And a subset to that question is: If you could implement one policy change at the federal level to support these small communities, what would that be and why? 

AW: I’m going to start with your second question first. One of the things I did was I wrote and put together 5 bills, and I took those to Washington, D.C. They were for community development financial institutions to have the resources to modernize — because the financial landscape is shifting, and it’s shifting really fast. When you think about digital currencies, if you’re already dealing with a population of people that don’t have access to mainstream finance, even the way it is today, imagine what happens when the digital divide happens: now, you have even more economic disparity. A cold mouth doesn’t get fed. We need to say something about it, and who can tell what the community needs better than the community? I believe that on the federal level, there needs to be deregulation on small community banks and credit unions, because these communities have unique challenges, and the financial institutions that serve these communities have unique challenges. There needs to be less scrutiny on smaller institutions and more support for them to be able to continue their important work, because if these institutions are not there, then we’re counterproductive, as a country. On your first question, I believe that philanthropic support needs to increase, because currently, federal support has slowed down, if it’s happening at all. There needs to be more advocacy by trade associations and communities to their legislators, to pay attention to how not addressing the need for communities to have access to mainstream finance hurts our economy. If you take care of the pennies, the dollars take care of themselves. The pennies do matter, the pennies do count, and we need everybody to be a part of the financial system in order for our financial system to be strong, as a country. We need an inclusive economy. 

OT: More generally, you talked about finance becoming more and more digitized — as an industry, where do you see it going in the future and how do you hope to see the landscape shift? 

AW: Well, one of the things I hope to see is that everybody’s included, and the policies don’t exclude people. I see the industry shifting to more self-custody — digital wallets, and also easier onboarding into the financial system if you have the knowledge and if you know how to use the tools. I see a lot of innovation with institutions that have more neo-banks, and your Chimes, your Cash Apps, of the world — I see those increasing because I see a lot of the brick-and-mortar traditional financial institutions, because they’re on a legacy system, they’re going to be outpaced by fintechs (financial technologies). Fintechs are the future. They provide platforms for organizations to be able to provide banking-like experiences in a way that meets people where they are, and they have the flexibility to do it because they don’t have to deal with a lot of the scrutiny and regulation that traditional banks and credit unions face. 

OT: Absolutely. Finally, since launching People Trust, what has surprised you the most about the demand or response from the community? For example, have you seen kids and teens taking more initiative because they know they have this background in the community? 

AW: Yes. We had a lady come into the bank, and she’s 65 years old, and she’s never had a bank account. She was so happy when she came and opened up her checking account. Her son passed away, and he was in the military, so she was left with $150,000 from his death. She took the money, and she put it into the bank, and she was just so proud about it. She considered the bank to be her financial advisor. We have people that haven’t banked ever that now have bank accounts. 

This interview has been edited for clarity.