This won't change unless more established players commit to innovations.Michael Froman is Vice Chairman of Mastercard and Former US Trade Representative.This is an opinion column. The thoughts expressed are those of the author.America is a global leader in business and innovation. And yet despite this reputation we haven't put that ingenuity to work to tackle one of our country's most critical economic challenges: how expensive it is to be poor.
In New York City, there are, on average, three times the number of bank branches per 1000 residents in areas with majority white populations, compared with areas with majority-minority populations. And traditional credit scoring models effectively exclude vulnerable communities from accessing the financing they need to build their business. Without economic access, efforts at improving social justice will sound like one hand clapping.
Our organizations, Mastercard and MoCaFi are coming together to explore a digital-first approach, to create affordable, sustainable, and scalable solutions that can create a more level playing field. CDFIs have had to undergo their own innovation curve this year – processing more digital applications and issuing loans electronically at scale. One organization, Community Reinvestment Fund, USA , created the online Spark Platform to address the increasing demand. The platform helped ease the application process and enabled more than one hundred small lenders to disburse $6 billion of loans from the federal Paycheck Protection Program.
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