Washington, D.C. – October 4, 2024: The Alliance for Innovative Regulation (AIR) proudly announced the release of a new white paper that highlights the critical technology challenges facing Minority Depository Institutions (MDIs) and outlines actionable solutions to help close the growing digital divide. The white paper, titled “A Purposeful Journey into Digitization: Lessons Learned from the MDI Digital Modernization Pilot and ConnectTech Programs,” underscores the essential role MDIs play in supporting marginalized communities, while offering a road map for these institutions to navigate their technological shortcomings and remain competitive in the digital financial services landscape.
As MDIs continue to serve as pillars of stability for communities of color and small businesses, they are increasingly disadvantaged in the rapidly digitizing financial ecosystem. AIR’s white paper reveals how MDIs struggle to overcome five key challenges, known as the “Five Cs”: Capital, Cost, Core systems, Capacity, and Change management. These challenges, if unaddressed, threaten the sustainability of MDIs and their ability to continue providing crucial services.
“Our Minority Depository Institutions are vital to the economic well-being of underserved communities, but they face a stark reality—without significant modernization of their technology, they will struggle to survive,” says Jo Ann Barefoot, CEO and Co-founder of AIR. “Closing the technology gap is not something MDIs can achieve on their own. It will require a holistic approach involving governments, philanthropic organizations, and the financial services sector. This white paper is a critical step in sounding the alarm and laying out the comprehensive solutions needed to ensure MDIs can continue their essential work in financial inclusion.”
AIR teamed up with the National Bankers Association (NBA), the National Bankers Association Foundation (NBAF), and Inclusiv to launch a collaborative effort in 2022 focused on helping MDIs overcome their technology gaps and accelerate their digital transformation. The MDI Digital Modernization Pilot, funded by Visa, and the MDI ConnectTech program, funded by Citi Foundation, JPMorganChase Foundation, and Visa, have successfully recruited 18 minority banks and credit unions across the U.S. and Puerto Rico, providing each institution with tailored digital technology assessments and implementation plans to modernize their tech infrastructure. AIR also hosted public and private forums to address the unique challenges facing MDIs, bringing together key stakeholders such as banks, U.S. regulators, fintech firms, and trade associations.
In addition to the white paper, AIR released a companion brief, which outlines key actions stakeholders can take to help advance solutions and further support MDIs in their digital transformation journey. To download the full white paper and companion brief, visit https://mailchi.mp/regulationinnovation.org/mdi-digitization-journey-white-paper.
The Alliance for Innovative Regulation (AIR) is a nonprofit, non-membership organization working to make the financial system fully inclusive, fair and resilient through responsible use of new technology. By connecting regulation, finance, technology and society, AIR drives global innovation and collaboration to address rapid technology change.
ARTICLE • The Survival Of Minority Depository Institutions Requires A Journey To Digitization
This brief focusing on key stakeholder actions to support MDIs is a companion to the white paper titled “A Purposeful Journey into Digitization: Lessons Learned from the MDI Digital Modernization Pilot & ConnectTech Programs.”
INITIATIVE • AIR Initiative to Create Digital Transformation Road Map for MDIs
The MDI ConnectTech initiative helps participating Minority Depository Institutions assess their technology capability, identify digital offerings to benefit their customers, and establish a road map to implement third-party digital solutions.
BLOG • Recapping MDI Innovate: A Purposeful Journey into Digitization
Finding solutions to help minority depository institutions (MDIs) thrive was the central theme of AIR’s high-powered conference, “MDI Innovate: A Purposeful Journey into Digitization,” which took place May 2nd in Washington, D.C.
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