The power of data to unlock more inclusive financial experiences

In today’s digitized world, data is everywhere – it provides insights into behavior and actions, informs decision-making, and drives innovation. When handled in a responsible, trusted manner, data can unlock improved experiences for both consumers and small businesses. One way this is achieved is through open finance, which enables the secure, consented sharing of financial data.

With its use of alternative data to build a more holistic picture of an individual’s or small business’s financial health, open finance helps drive inclusion for those that historically may have lacked access to diverse financial services.

At the Mastercard Center for Inclusive Growth, our Strive USA program is helping a growing number of small businesses get capital, go digital, and grow know-how and networks. Since 2022, the program has:

• Delivered business support services to more than 1.8 million small businesses[1]
• Enabled the deployment of $45+ billion in loans via more than 700 community institutions[2]

Small businesses continue to be the backbone of our economy employing nearly half of the American workforce, 70% of new jobs created since 2019[3], and representing 43.5% of America’s GDP[4]. The need to efficiently reach and support small businesses is greater than ever, especially as many continue to face challenges in accessing capital and achieving growth. A recent study by Goldman Sachs states that more than 75% of surveyed small businesses are worried about access to credit[5].

One powerful avenue to bridge this gap is through Community Development Financial Institutions (CDFIs). With over 1,400 CDFIs across the US[6] including community development banks, credit unions, loan funds, and venture capital funds - CDFIs specialize in serving underserved communities by providing access to credit and business coaching - from financial health to support like marketing and accounting.  

In recent years, the critical role of CDFIs has come to the forefront. From helping small businesses recover from the COVID-19 pandemic to climate-related disasters like hurricanes and wildfires, CDFIs have acted as first responders for acute economic crises. In fact, CDFIs deployed billions in federal relief to small businesses through the Paycheck Protection Program (PPP). One analysis found that more than 25%[7] of loans made by CDFIs went to businesses in high poverty areas, more than double the share of loans made by the nation’s top 50 banks[8].

While capital is critical fuel to help small businesses grow, so too is long term relationship building – maintaining and deepening that relationship over time delivers benefits to both the CDFI and the entrepreneur. To increase stickiness, CDFIs can leverage open finance to help small businesses with the personalized insights they seek to continue to operate and scale. Our research shows that 85% of entrepreneurs are looking for customized financial recommendations[9] derived from their business data which CDFIs, with their proximity and trusted relationships, can deliver effectively. 

CDFIs support small businesses in meaningful ways that drive growth, but the institutions themselves face significant challenges including staffing, high acquisition costs, thin operating margins, and high customer turnover. According to the Federal Reserve Bank of Richmond’s 2023 CDFI Survey, three out of four CDFIs[10] saw an increase in demand for products and services over the past year, and a similar percentage expects demand to continue increasing. The data shows that it is essential for CDFIs to embrace digital solutions that provide real-time insights and streamline service delivery – helping them meet the growing demand from entrepreneurs in a cost-effective and scalable way.

Community Reinvestment Fund, USA (CRF) is a CDFI headquartered in Minneapolis, MN and has been a community lender for more than 35 years. It has grown from a local lender to a national support organization for hundreds of CDFIs across the country by building and delivering digital platforms that enable liquidity through participation programs, direct lending, and technology services to the community development finance industry. Specifically in recent years, it has received generous support from Mastercard Strive USA, among other funders, to build and enhance digital technology solutions that help CDFIs across the U.S. reach and better serve the small businesses in their communities.

To help address the technical, staffing, and financial constraints CDFIs face, CRF Insights was launched as an interactive dashboard for CDFIs to view real-time data and insights about their small business customers. These insights can help business coaches and lenders develop tailored advisory services to position their customers for success with the potential to improve reporting outcomes and enhance portfolio management processes. CRF Insights leverages Mastercard’s Open Finance, powered by Finicity, a Mastercard company, which provides secure, consented data to provide a more complete view of a small business’ financial health.

When a business uses Mastercard's open finance integration with CRF Insights, it can retrieve up to two years of transaction data in a matter of seconds. This near real-time process replaces the painstaking manual collection of statements and data input with a safe, streamlined technology service. CDFIs, business support organizations, and small businesses all benefit from the streamlined process and additional insights that come from the open finance integration of CRF Insights.

Enabling the consented data via open finance (where users consent to which accounts to link and which data to share) helps enrich CRF Insights - fueling a structured and normalized view that offers CDFIs a more comprehensive view of the success of the small businesses they support. According to Accompany Capital, a NYC-based CDFI that has been using CRF Insights to support their lending and portfolio management efforts since the pilot launch in Spring of 2024, “Insights’ open-finance capabilities can provide a streamlined approach to accessing borrowers’ complete financial picture from a shared point of view, enabling the organization to structure better outcomes for the clients they serve and avoid collections whenever possible. This data-driven approach empowers the team to proactively restructure loans, when necessary, support borrower re-engagement, and align internal teams around a shared understanding of the client’s financial position.”

This is just one example of how open finance can be a game-changer for financial inclusion, allowing small businesses to unleash the power of their data to access innovative and improved financial experiences.   

Mastercard has long been committed to protecting financial data for consumers and small businesses guided by our data and tech responsibility principles, which encapsulate the foundational promises that we extend to our work with customers and partners. Trust and transparency are key to a digital economy that works for all. This is at the center of our global approach to open finance and will continue to be.

Our partnership with CRF, a Mastercard Strive USA partner, unlocks the possibility to offer more insights to CDFIs to better meet the needs of their customers across the US, helping small businesses thrive today, and in the future. To date, CRF has injected more than $3.6 billion[11]  to stimulate job creation and economic development across the U.S. and, alongside its CDFI partners, has deployed federal funding with our support in NY, NJ, IL, CA, NV and several other states. CRF's programmatic approach is responsible for $1.2 billion of this deployment to more than 25,000 businesses since 2020[12]. The organization plans to build upon these efforts and aims to launch several state/regional small business loan programs in the coming years. As our relationship evolves, we look forward to the continued partnership with CRF to deliver access to innovations, capital, and support to small businesses across the US that enables them to thrive.