While the economic disruptions of COVID-19 are widespread, they have “disproportionately” disrupted minority depository institutions, also known as MDIs, said Jelena McWilliams, chairman of the Federal Insurance Deposit Corporation.
Speaking Wednesday in the second of a series of webinars organized by AFX and co-hosted by the University of Chicago Law School and the Becker Friedman Institute, McWilliams said many Black and Hispanic consumers remain “unbanked,” without banking relationships that allow them to build credit.
“These disparities present challenges“ for MDIs (defined as banks that are 51 percent or more minority owned), “which represent a lifeline to the communities they serve” and are vital to mortgage and small-business lending, McWillams said.
Innovative technology is a key to overcoming these challenges, she said. But the cost of new technology is often prohibitive for minority banks. In response, the FDIC is seeking to expand banking services to underserved communities by partnering banks with third-party fintech firms through its FDiTech office, which was launched last year, she said.
As part of its FDiTech initiative, the FDIC last month published a Request for Information in the Federal Register, seeking public comment on the potential for a public-private partnership and voluntary certification program that would promote the adoption of innovative technologies at financial institutions supervised by the FDIC. You can read the FDIC request here.