The recent overhaul of the Community Reinvestment Act (CRA) regulations marks a pivotal moment for banks across the U.S. As the finalized rules from U.S. banking regulators come into effect, banks must rethink their strategies for 2025 to ensure compliance while seizing new opportunities for growth. What most banking professionals may not realize is that geospatial analytics offers a transformative way to navigate these changes.
Did You Know?
According to recent studies, underserved communities—particularly minority populations—are disproportionately affected by financial exclusion. For instance, data from the FDIC shows that 13.8% of Black households and 12.2% of Hispanic households are unbanked, compared to just 2.5% of White households. Geospatial analytics enables banks to precisely identify these underserved regions, helping them meet CRA requirements while simultaneously boosting their bottom line by tapping into underutilized markets.
Opportunity to Monetize:
By using PathFinder’s geospatial tools, banks can monetize CRA compliance efforts through targeted mortgage and non-mortgage lending. By focusing on neighborhoods that have been underserved, you create opportunities to originate new loans that also align with CRA goals. In fact, banks that engage in community reinvestment activities in these areas have reported an average increase in lending volume of 15-25% within two years, according to the Federal Reserve.
Moreover, tapping into low- to moderate-income (LMI) markets can lead to new cross-sell opportunities, including personal loans, auto loans, and small business loans. Identifying and reaching these consumers early can generate long-term revenue streams for your bank.
Monetization Insight: Use geospatial analytics to boost your non-mortgage loan portfolio by targeting consumers in CRA-eligible neighborhoods, who are also prime candidates for consumer financial products beyond housing.