The Financial Technology Association (FTA) submitted a statement for the record for the House Committee on Financial Services Hearing, “An Unprecedented Investment for Historic Results: How Federal Support for MDIs and CDFIs Have Launched a New Era for Disadvantaged Communities.” The statement reads in part:
“We applaud efforts by the Committee to examine the important role played by Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs) in delivering capital to communities of color and socially and economically disadvantaged individuals. FTA and its members aim to support a financial system that is inclusive and equitable for diverse populations and is proud of the progress yielded by partnerships between MDIs, CDFIs, and financial technology (fintech) firms.
“CDFIs and MDIs play a critical role in closing the racial wealth gap and extending financial services to traditionally unbanked and underbanked communities. Yet, it is also important to recognize that the demands of banking customers are changing; in 2021, 76 percent of Americans said the ability to connect their accounts to apps and services is a top priority when selecting a bank. In order to meet evolving customer demands, MDIs and CDFIs are increasingly partnering with fintechs to offer more competitive, technology-driven products and services. FTA’s members are committed to partnering with these institutions to ensure better access to capital and create a positive impact on underserved communities. On the consumer side, fintech companies fill the existing consumer credit gap by extending credit and opening financial services to historically marginalized communities, helping create a more inclusive and equitable financial system, and offering alternatives to predatory and high-cost loans.
“Open banking—a financial ecosystem that gives consumers control over the full range of their financial data to serve consumers better and unlock choice—underpins partnerships between fintechs and MDIs and CDFIs. CDFIs and MDIs that partner with fintechs leverage the benefits of open banking, thereby allowing them to give consumers access to services they desire, like bill payment management and optimization, saving round-up tools, overdraft protection services, and personalized investment advice.”
Read the full statement for the record here.