Stratyfy and Beneficial State Foundation collaborate to tackle racial lending inequities through the Underwriting for Racial Justice (URJ) program.
The Beneficial State Foundation and Stratyfy, a fintech company that uses machine learning to make credit underwriting decisions, have teamed to reduce racial lending inequities.
The Underwriting for Racial Justice (URJ) program, which is operated by the Beneficial State Foundation, seeks to find ways to increase communities all across the US’s access to fair and affordable credit.
Through their agreement, Stratyfy and Beneficial State Foundation will start a two-year trial initiative to help people of color access capital. The effort expects that the program will help communities who have historically lacked resources, been underrepresented, and been impacted by racial imbalance in the lending sector, generate wealth.
20 lenders will participate in the new program and use Stratyfy’s technology, including its credit risk and decision optimisation solutions, to predict creditworthiness objectively and improve the fairness of their loan policies.
“We are honored to join with Beneficial State Foundation on this ground-breaking effort,” said Stratyfy co-founder and CEO Laura Kornhauser. Stratyfy provides collaborative thoughts and recommended steps to make it happen. Innovative URJ lenders are changing how people of color in their communities get loans.
“Stratyfy is a key partner in this effort, using their credit risk solution to help lenders confidently make bold and significant changes while managing risk and meeting regulatory requirements for safety and soundness,” said Beneficial State Foundation executive director and chief impact officer Erin Kilmer Neel. The Beneficial State Foundation created Underwriting for Racial Justice to help lenders increase equitable credit.
Moreover lenders will be able to gather, share, and learn from peers performing comparable work by combining the URJ program and Stratyfy’s technologies, fostering collaboration and enabling a constant flow of information across these financial institutions.
Racial disparities in lending and banking are a $40,000 problem
Compared to their white counterparts, borrowers of color are more prone to rely on high-interest financial services. Many have been forced to do without or use risky, exploitative financial alternatives as a result of this.
According to one study, giving more Black and Latino or Hispanic Americans access to financial services might also result in lifetime savings of up to $40,000. This data shows how unequal lending is for people of different ethnic backgrounds, which is why Stratyfy and Beneficial State Foundation are dedicated to advancing more equitable lending processes through cutting-edge technological innovations.
Shannan Herbert, executive vice president of inclusive credit at Stratyfy, said: “As a former chief credit officer of a community development finance institution, I understand the significance of taking concrete steps to address the systemic racial inequities in lending. Lenders will have the resources to start industry-wide transformation, get rid of outdated, racially unfair processes, and also make new, equitable lending into normal practice by integrating Stratyfy’s technology with URJ’s mission-driven strategy.
