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.
“This is the third in a series of convenings over a year and a half,” said Jo Ann Barefoot, CEO and Co-founder of AIR. “In the beginning, we focused on what are the problems, and now we’re focusing more on what are the solutions, and how can we actually get there?”
The conference featured an impressive schedule of speakers, panels, fireside chats, and technology demonstrations. The energy in the room was palpable, with great engagement driving discussions on how to combat a major threat to the survival of MDIs: the disparity in digital capabilities that puts them at a disadvantage against their better-financed competitors.
“We are excited that this conference was able to bring together a cross-section of the ecosystem,” the AIR CEO added, remarking on the rarity of seeing banks and credit unions interacting at the same event. “We also had fintech providers and many of the vendors that are providing the connections between banks and fintechs that are so needed. And we had the regulators to bring the policy lens to this.”
Keynoting the conference was Kate Dinota, director of North America Inclusive Impact & Sustainability for Visa. She shared details of a program for which Visa is providing $100 million in deposits to MDIs across the country as a means of enhancing their ability to make loans and support affordable housing options in their communities.
Visa is also funding MDI ConnectTech, with the goal of providing support for MDIs to assess their existing technology capability and the technology requirements necessary to implement a targeted third-party solution along with bespoke implementation plans that will enable MDI’s digital transformation.
The day featured two fireside chats, each of which offered a distinct regulatory perspective—the first from Rodney Hood, former chairman of the National Credit Union Administration (NCUA), and the second from Acting Comptroller of the Currency Mike Hsu from the Office of the Comptroller of the Currency (OCC).
During his fireside chat, the former NCUA chair stressed the importance of financial inclusion, calling it “the civil rights issue of our time” and highlighting the unique role that MDIs play in serving marginalized communities. He affirmed digital transformation as crucial to MDIs’ survival, noting that pre-pandemic, many people perceived digital technology as a “shiny object,” but today, “it has gone from a perceived luxury item to a strategic imperative.”
Two panels delved into the steps MDIs need to take to move forward on their digitalization journey. Sharing their insights in these discussions were leaders of MDIs, from both the bank and credit union sectors, as well as additional leaders from association and technology companies.
The first panel, “Navigating the Digital Frontier: MDIs’ Journey of Transformation,” set the stage by describing the obstacles that impede MDIs from bridging the digital gap. The panel affirmed that cost is the #1 barrier, with lack of capacity a close #2.
A recurring theme during this and other presentations was the importance of cores. “Getting that relationship right is important,” said Rob Nichols, president/CEO of the American Bankers Association, noting that there has been progress among the core providers in working with MDIs. “We’re encouraging them to work with more speed and agility to help MDIs, CDFIs, and community banks more broadly deploy the technology that will enable them to innovate, compete, and serve their customers, clients, and communities.”
The second panel focused on the topic of “Tech-Driven Transformation Empowering MDIs with Innovative Solutions.” Moderator Karan Jain, CEO of NayaOne, asked the panel why now is the time that MDIs should address their digitalization needs.
“Because we have an existential threat,” answered Robert James, president/CEO of Carver Financial Corp., the only black-owned multi-bank company in the U.S. “Our institution has doubled in size in the last three years. We have enough capital to probably get five times bigger than we are. But if we don’t … take this opportunity to transform our business to digital first, we will not exist.”
AIR’s Chief Program Officer Kisha Perkins, along with MDI ConnectTech Program Director Alexandria Currie from the National Bankers Association Foundation (NBAF), gave the assembled attendees a progress report on MDI ConnectTech, a program that aims to strengthen MDI’s competitiveness through digital modernization.
Working with industry partners, AIR and the NBAF have completed 19 digital technology assessments, covering key areas such as digital payments, automated lending, and customer relationship management. Now the organizations stand ready to build on that foundation by implementing solutions to bolster MDIs’ technology and other capabilities.
“Our main next step is: How do we now solve the problems that MDIs have? How do we help them in their technology journey?” the presenters explained.
As the conference came to a close, attendees enthused about the quality of the day’s discussions, both formal and informal. “I think part of the power of today was the different people in the room,” said Brian Argrett, CEO of City First Bank and one of the day’s panelists. “It’s a unique mix of individuals representing different aspects of the industry that don’t normally sit next to each other at the table.”
Another of the day’s panelists, Michelle Outlaw, President of Florida Agricultural & Mechanical University Federal Credit Union, likewise appreciated the diversity of attendance and how well it supported one of the event’s major themes—collaboration.
“The importance of an event like this is to bring together not only like-minded people but people with different skill sets and knowledge,” she said. “When we come together and collaborate, I think it makes (the experience) richer for all of us.”
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.
VIDEO • MDI Innovate: A Purposeful Journey into Digitization Recap
MDI Innovate: A Purposeful Journey into Digitization is AIR’s third convening focused on Minority Depository Institutions (MDIs). This event on May 2, 2024 in Washington, D.C. aimed at addressing the critical issue of digital modernization faced by MDIs.
WHITE PAPER • A Purposeful Journey into Digitization: Lessons Learned from MDI Digital Modernization Programs
This paper underscores the essential role Minority Depository Institutions (MDIs) play in supporting marginalized communities, while offering a road map for these institutions to remain competitive in the digital financial services landscape.
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