Commentary: FinTech and the Liberation of the Community Reinvestment Act Marketplace

Michael Gaughan
National Development Council

Observers of the Community Reinvestment Act (CRA) have for many years noted the pressing need for reform of the law’s principal unit of analysis—the assessment area. As noted on prior anniversaries of CRA, the geographic basis for assessment areas has become increasingly irrelevant, given the disparity between where deposits are held and where the business of banks actually takes place. What was once an observation on a growing trend is quickly becoming a historical footnote, thanks to the way financial technology, or FinTech, is rewriting how and where financial services are provided. To date, FinTech organizations are without community reinvestment obligations. The impending oversight of the FinTech market presents an historic opportunity to rethink assessment areas, while using technological innovation to more equitably distribute CRA investments to the people and communities most in need.