Equity-Driven Capacity Building
Unfortunately, in an industry that is becoming increasingly data-dependent, many capacity-constrained MDIs find themselves tying data management and reporting exclusively to their compliance obligations. Few MDIs have the opportunity to leverage data for dashboards, scorecards, or other forms of data visualization – all of which can enable them to compete more effectively in the digital age.
Enter the National Bankers Association. For nearly a century, the Association has been focused on a singular mission: to help close the racial wealth gap by ensuring that underserved communities have fair access to financial services, products, tools, and resources that enable them to achieve their financial objectives and enhance prosperity.
To bridge the tech gap for MDIs, the Association’s non-profit arm, the National Bankers Association Foundation, collaborated with the Alliance for Innovative Regulation (AIR) and Citi Foundation's Community Finance Innovation Fund to create the MDI ConnectTech, digitization program which provides customized technology solutions to help MDIs streamline their operations, expand their customer base, and ultimately thrive.
Recognizing the need for an easier way to manage data, both for itself and for the MDIs it supports, the Foundation recently partnered with UpMetrics to build a sustainable tech system to meet the growing demand for data reporting from regulators, funders, and investors in the wake of increased global awareness of the racial wealth gap. Together, they began shaping ways in which UpMetrics could optimize impact measurement for the Association and help its MDIs collect data, understand investment impact, and gain insights that were previously unavailable.
Ultimately, this partnership co-designed EquityEQ, the only platform, and process enabling MDIs to produce racial equity-centered studies and datasets which allow for more culturally-relevant assessments of the impact created by their lending, depository, and other financial products and services.
“We kept hearing from our member banks that they needed an easy way to quantify their impact into aggregated statistics and to show that impact visually and not just through narrative,” explains National Bankers Association President and CEO, National Bankers Association Foundation Executive Director, Nicole Elam Esq.
With data aggregated using the platform, for example, the Association discovered that the 10 banks used in a lending sample deployed more than $3 billion in 2021 alone, with more than 70% of those loan dollars flowing to majority-minority communities and communities with higher poverty rates than the overall national average.
“At the same time, we knew that mission-driven banks needed a solution that could meet banks where they are in terms of capacity to collect, manage, and share data, and assist with compliance,” Elam continues. “This partnership with UpMetrics addresses several pain points simultaneously and provides a seamless path to robust data reporting and compelling data visualization.”
The new assessment tool EquityEQ captures and tracks progress on the work of MDIs, assists with compliance reporting, informs product and service delivery, and creates an industry framework that identifies best practices, strategies, and opportunities to strengthen, support, and better equip low- and moderate-income communities in building generational wealth. It also functions as an investor tool to evaluate the social return on investments, and includes an Impact Stakeholder Roundtable to engage MDIs, investors, research institutions, foundations, and thought leaders on the work of MDIs and the root causes of the vast disparities in wealth across racial and ethnic groups.
Today, the work pioneered by the partnership is being utilized in three key ways:
● Individual banks are using the platform regularly, leveraging their data for compliance and to tell their story of impact to their boards and other key stakeholders;
● Institutional investors are using the data to understand how their investments are making a tangible difference in the places receiving lending dollars; and
● The Association is using impact data to drive attention to the MDI sector, quantifying the impact of mission-driven lending in underserved communities as part of its broader goal of advocating for these financial institutions and the people and places they serve.
“Having the evidence to not only tell the story, but to sharpen the activities of local financial institutions, is critical. With more data comes attention and focus from policymakers, and intentional co-investments with other sources of private capital,” notes Aron Betru, Senior Advisor, Milken Institute and COO/CSO, Trident.
Anthony Barr, Research and Impact Director at the National Bankers Association Foundation, concurs, adding, “The greatest benefit to having a dedicated team alongside this platform is that we are able to respond to questions, concerns, or suggestions from participating banks in real-time, while continuing to build out additional functionality and features based on the evolving needs of the sector.”
As just one example, UpMetrics has been extremely nimble in responding to updates from the Treasury Department regarding reporting obligations for its Emergency Capital Investment Program to support data reporting and visualization needs associated with a deeply technical set of requirements.
Ultimately, supporting MDIs in this way will lead to increased financial inclusion and additional lending in underserved communities because communities can only be as strong as the financial institutions that provide credit and capital in those communities.