Five CDFIs delivering innovative strategies to meet diverse consumer needs, are set to receive a cumulative $4MM from the Wells Fargo NEXT Awards for Opportunity Finance. These five winning strategies each uniquely tackle problems to create solutions for some of the most disinvested communities across the U.S. From developing an innovative platform for rural Americans to connect locally to their finances, to meeting the needs of religious communities, to combatting some of the most entrenched predatory lending practices with responsible, affordable alternatives, these CDFIs each examined the needs of their communities and created distinct solutions for families and communities.
“Never before has it been more necessary for CDFIs to embrace fin tech, explore new distribution models, and develop leading-edge, responsible financial products,” said Fran Lutz, interim president and CEO of OFN in a press release announcing the awards.
In Brownsville, Texas, where payday and title lenders use loopholes in state laws to charge borrowers astronomically high interest rates, Rio Grande Valley Multibank Corporation (RGMVB) is awarded $1.6 million for an innovative strategy to provide responsible alternatives through employer-based small dollar loans. In Gray, Tennessee, Appalachian Community Federal Credit Union (ACFCU) is awarded $2 million to deploy Virtual Teller Machines in the Appalachian Mountains, connecting families, who otherwise might have to drive more than 40 miles to make a simple deposit, with a personal interaction with a teller via microphone and video camera. Together RGMVB and ACFCU are the recipients of the multi-million dollar NEXT Opportunity Awards, awarded by the nation’s largest awards program for CDFIs.
In addition to the multi-million dollar awards, three CDFIs were recognized for new innovations that are on the verge of creating greater access to capital, through the NEXT Seed Capital Awards. These $100,000 awards will help launch start-up consumer financial services to serve thousands of individuals and families.
- Like ACFCU, NEXT Seed Capital Award winner Lower Valley Credit Union recognizes the needs of rural communities to gain local access to banking services. Launching a Virtual Teller Machine in rural immigrant communities in Washington state will connect roughly 2,100 agricultural laborers with much-needed services such as ITIN mortgage and consumer loans.
- The Nashville and Middle Tennessee area is home to over 80,000 Kurds, Egyptians and Somalis, as well as many Sudanese and Hispanics. The Housing Fund is working closely with representatives of the local community and local bankers to implement the Alternative Payment Plan mortgage loan product in compliance with cultural norms and ethical financing.
- Texas Community Capital (TCC) is expanding RGMVB’s payday loan alternative product throughout Texas and to other states; this product allow people to borrow responsible funds from a source they already know and trust; their employer, helping to keep more consumers from becoming entrapped in a black hole of debt that is the payday lending cycle. By making banking accessible in rural, urban, and immigrant communities, these five CDFIs embody the mission that the Wells Fargo NEXT Awards for Opportunity Finance has had for 10 years: to innovative, replicate, and create access to capital where it is needed most.
Read the full press release to learn more about these innovative strategies, then join us in October at the NEXT Awards Ceremony during the OFN Conference in Atlanta to celebrate strategies that are working for, not against, consumers.