Skip to main content

Economic Development: Additional Training Could Help Small Lenders Implement Technology

GAO-24-106226 Published: Mar 28, 2024. Publicly Released: Apr 11, 2024.
Jump To:

Fast Facts

People in low- and moderate-income communities can't always access loans through traditional banks. Community Development Financial Institutions are organizations that provide financial services to fill this gap.

Our survey of these institutions found that many small CDFIs don't have the technology to best serve their customers, manage operations, and conduct outreach.

The Department of the Treasury receives funding to support CDFIs and has increased the grant funding available for improving their technology but hasn't provided technology-related training.

Our recommendation addresses this issue.

The exterior of the entrance to the Department of the Treasury.

Skip to Highlights


What GAO Found

Community development financial institutions (CDFI) are lenders that provide financial products and services to underserved communities, and minority depository institutions (MDI), which can be certified as CDFIs, are generally banks or credit unions primarily owned by minority individuals or serving minority populations. In response to GAO's survey of CDFIs and MDIs, many small CDFIs and MDIs reported they lack the technology needed to provide online services or to underwrite loans, manage operations, and conduct outreach more efficiently. Officials GAO interviewed from some small institutions said their limited technology—such as lack of ability to provide mobile banking—constrains their ability to serve underserved communities. Technology costs and limited staff capacity were the most common reasons CDFIs and MDIs cited for not being able to obtain the technology they need, according to a GAO survey. These institutions reported that additional funding and training related to technology could help them address these challenges.

Challenges CDFIs and MDIs Reported Frequently or Always Prevented Them from Acquiring New Technology

Challenges CDFIs and MDIs Reported Frequently or Always Prevented Them from Acquiring New Technology

The CDFI Fund has increased the grant funding CDFIs can use for improving their technology but has not provided technology-related training. CDFI Fund certifies financial institutions (including eligible MDIs) as CDFIs and provides financial and technical assistance. Over the last 10 years, total CDFI Fund technical assistance grants increased from $3.6 million to $25.2 million per year. The CDFI Fund's strategic plan states it will develop training programs targeting key issues affecting CDFIs. However, it has not created any new training or materials since 2020, and none related to technology. Fund officials said they were aware of the impact of technology capacity on small CDFIs' ability to serve their communities and grow. They said they have considered creating training and materials to help CDFIs build technology capacity, but they do not have a time frame for doing so. Such resources could help CDFIs implement the technology they need to increase lending to underserved communities.

Why GAO Did This Study

CDFIs and MDIs target loans to traditionally underserved businesses and individuals. Prior GAO work identified challenges some CDFIs and MDIs had accessing emergency lending capital during the COVID-19 pandemic, raising questions about whether they had the technology capacity needed to best serve their communities.

GAO was asked to review CDFIs' and MDIs' technology capacities and potential federal solutions to address any technology challenges. This report examines (1) CDFI and MDI officials' views on their technology capacity and challenges, and (2) available federal resources for improving CDFI and MDI technology.

GAO surveyed a sample of 711 CDFI and MDI officials in June and July 2023 and generalized results to the population as a whole and to small and large institutions. GAO also reviewed relevant federal laws and regulations and agency funding documents, strategic plans, and other program documentation, including those from Treasury. In addition, GAO interviewed representatives from 23 judgmentally selected CDFIs and MDIs, and officials from Treasury and federal financial regulators.


GAO recommends the CDFI Fund develop training or other materials for CDFIs related to technology, especially for smaller institutions. The CDFI Fund agreed with the goal of the recommendation but proposed additional technical assistance grants as an alternative approach. GAO maintains that developing training or other materials would more directly address concerns CDFIs expressed.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury The Secretary of the Treasury should ensure that the Director of the CDFI Fund develops training or other materials for improving CDFIs' technology capacity. These resources should address the specific capacity limitations of and challenges faced by CDFIs, particularly smaller institutions. (Recommendation 1)
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Full Report

Office of Public Affairs


BankingCredit unionsEconomic developmentFederal deposit insuranceFinancial institutionsFinancial productsNew technologiesMinority groupsCommunity developmentTechnical assistance