Banking and other financial institutions are critical to facilitating financial access and wealth accumulation. But credit access is uneven, especially by race and ethnicity. To address the systemic underwriting challenges that undermine financial inclusion and wealth building for historically disadvantaged communities, Beneficial State Foundation (BSF) designed its Underwriting for Racial Justice initiative (URJ). This program, which harnessed Stratyfy’s AI capabilities and GreenArc’s impact capacity, worked with participating financial institutions to expand credit access to people facing systemic inequities. URJ helped lenders achieve key programmatic goals while identifying key strategies to further strengthen outcomes and drive programmatic scale.

Key Takeaways

The URJ initiative employed a three-pronged intervention to support expanded financial access among participating financial institutions. Through its community of practice, the leveraging of skills and practices of partners (Stratyfy, the Urban Institute, and GreenArc), and industry-wide communication, URJ documented several performance goals:

• Institutions that changed their underwriting practices and risk assessments in evidence-based ways to increase loan approvals for people of color
• Institutions that effectively implemented loan programs with alternative underwriting models
• Institutions that implemented progressive, trauma-informed technical assistance

In addition to systemic and structural barriers to lending, political and economic fluctuations also presented opportunities to design and sharpen the program’s toolkit. Despite these sources of volatility, URJ was able to support lenders’ progress in expanding financial access. Meanwhile, additional steps could be taken to drive scale and widen impact:

• The URJ program could expand the number of community banks and other mission-focused financial institutions.
• The URJ program could expand to larger depository institutions.
• The URJ program also serves as an important template for the use of AI in boosting loan approvals without materially affecting borrower performance and other sources of risk.

How We Did It

We obtained data through interviews with other URJ partners, including BSF, Stratyfy, and GreenArc. We also gathered information from participant interviews BSF held with participant institutions. The report also reflects programmatic information collected throughout the URJ initiative.