Friday, March 1, 2024
Recent changes to the ruling, jointly made by the OCC, Federal Reserve Board and Federal Deposit Insurance Corporation in October 2023, reflect the U.S. government's efforts to strengthen and modernize the CRA. The Green Sheet recently sat down with Nikki Estes, human networking executive at iCG Pay, to explore the CRA's impact on financial services.
Following are interview highlights:
What are the fundamental components of CRA and why are they important?
The CRA stands on four pillars: lending, investing, servicing, and educating. These aren't just good deeds; they're the backbone of a bank's relationship with its community. By focusing on these areas, banks meet regulatory requirements and build community trust and support. It's akin to saying, 'we're here for you' in a language everyone understands - money and support.
What are the determining factors for sizing up a bank?
Sizing up a bank for CRA purposes is a bit like determining whether you're a small, medium, or large when it comes to t-shirts. It's all about assets. But unlike t-shirts, where size is fixed, the CRA adjusts its size categories to reflect economic changes. This ensures that banks are always wearing the "right size" when it comes to their community contributions.
What inspired you to become involved in promoting CRA compliance?
My journey into CRA compliance was sparked by a love for education, by instilling money management into our children from a young age to have an impactful advantage going into adulthood.
When iCG Pay joined the Nacha Payment Innovation Alliance, I saw other financial professionals from communities also dealing with financial hardships caused by lack of knowledge about building a budget, protecting against fraud and managing present and future finances.
Any Hever, director of the Major League Baseball Players Association, opened my eyes about gaps in education for STEM in select philanthropic youth empowerment programs and efforts to bridge those gaps in financial literacy for the next generation. She and other community bank mentors inspired me to help create financial literacy initiatives that highlight finance as a force for good.
What challenges are banks facing and how does CRA compliance address these issues?
Banks today juggle a variety of challenges, from the digital banking evolution to ensuring equitable service across all communities. CRA compliance cleverly tackles these by pushing banks to not only innovate but also to ensure their innovations reach and benefit everyone, especially in low- and moderate-income neighborhoods.
It's a bit like being asked to run a marathon but making sure everyone crosses the finish line, not just the fastest runners. Banking community executives gain an opportunity to do more than hold money. They can become beacons of encouragement by providing specialized services, whether low-cost lending programs, entrepreneurship support, home improvement, auto loans, or providing financial literacy education to enhance the next generations' earning, spending and investing habits.
How will you collaborate with banks to elevate awareness of this issue?
Collaborating with banks to boost CRA awareness is like forming a rock band where everyone plays a different instrument while focusing on community upliftment. From workshops to partnerships, we'll turn up the volume on CRA's role, ensuring it's a hit single that everyone wants to play on repeat.
The team coming together will market entertaining exhibitions where youth learn about how to build a budget, mobile device apps that walk users through lessons on financial literacy and a webinar series to build a knowledge base for bankers who train account holders. We've found excellent resources at FDIC, and by engaging with thought leaders in banking and compliance, we've become privy to strategic connections with talented financial wellness leaders.
How would you advise financial institutions to achieve and maintain CRA compliance?
Advising banks on CRA compliance is about encouraging them to see CRA not as a regulatory hoop to jump through but as a strategic advantage. It's like telling them to keep their garden well-tended not just to meet homeowner's association covenants, conditions and restrictions, but to create better neighborhoods. Regular assessments, innovative programs and genuine community engagement are the gardening tools I would recommend.
How can others in our industry collaborate and help drive awareness of CRA?
Driving CRA awareness is a team sport. It's about sharing success stories, pooling resources for community projects, and hosting the financial equivalent of TEDx Talks. We're in this together, and by sharing the playbook, we ensure everyone knows the plays and how to execute them for the win.
To summarize, CRA compliance isn't a box to check; it's an opportunity to weave your bank into the fabric of your community. It's about creating a legacy of support and empowerment. And remember, in the grand tapestry of community banking, every thread counts. So, let's make it vibrant and strong. 
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