Cross River Bank

Fintech Serving the Underserved During times of crises, our nation has rallied to help those devastated by disasters not of their own making. The Covid-19 pandemic presented an unprecedented emergency because it impacted everyone, everywhere. The old rules and processes to deliver aid on this scale simply would not be enough and would leave out the communities that have traditionally had trouble – or even been deliberately excluded from – the assistance they desperately needed. In March of 2020, at the onset of the pandemic, Congress passed the CARES Act which included the Paycheck Protection Program (PPP), and partnered with traditional and fintech banking and lending institutions to deliver critical funds to help small businesses keep employees on payroll. Cross River and the fintech sector answered the call of Congress with the mandate to help small businesses survive. While many big banks were non-committal, fintech filled the void, developing automated application processes that included necessary and appropriate controls based on constantly evolving SBA guidance. Recent studies by the NY Fed, the San Francisco Fed, and the US Government Accountability Office (GAO) all found that fintechs played an essential role in serving borrowers that would have otherwise been unfairly excluded. According to research from the NY Fed, 95% of large bank applicants showed that applicants had prior relationships with a bank. Fintech lenders such as Cross River were able bridge the gap and provide financial support to previously underserved applicants, even those without a direct relationship. A study released by researchers at NYU Stern, NBER, Ocrolus, and the University of Chicago, demonstrated the imperative role fintech played in creating equity through the PPP program. They found that fintechs automated underwriting processes that helped reduce racial discrimination. Further, NY Fed research indicated that fintech lenders were critical to delivering PPP loans to underrepresented populations during the pandemic; one in four Black-owned companies applied with fintech lenders. Without the innovation of the fintech sector, countless underserved small businesses would have been left out from receiving the aide the desperately needed. It is essential that this be the model going forward and that the democratization of finance, ushered in by fintech, embraced as a core fundamental in how Americans access capital in good times and bad. ...... For more information, please visit our website crossriver.com