Forging the Future: How MDIs Are Partnering to Compete in the Digital Era

By Cheryle Thorne-Harris, National Bankers Association Pillar Program Director  

Minority Depository Institutions (MDIs) stand at a crossroads between tradition and transformation. With outdated infrastructure, escalating regulatory demands, emerging digital assets, and intensifying competition from fintechs and large financial institutions, their ability to compete is under real threat. 

And yet, with more than $358 billion in assets and over 6 million customers in historically underserved communities, MDIs remain trusted anchors in the markets they serve. Even with limited resources, they fuel local economies, support small businesses, and act as vital economic generators. 

If adopted strategically, digital tools—from real-time payments to digital assets—could reshape how low- to moderate-income communities access and build wealth. For MDIs, the opportunity lies in pairing deep community trust with modern technology, bold partnerships, and innovative business models. This isn’t just reactionary adaptation—it’s mission-driven reinvention designed to ensure MDIs continue serving their communities with excellence, resilience, and lasting impact. 

Meeting the Challenge Head-On 

As digital expectations rise, MDIs must confront limited resources, outdated systems, and growing pressure from unregulated competitors. One of the most effective strategies has been building shared technology platforms that reduce costs while expanding digital capacity. 

The MDI ConnectTech program supports this effort by helping banks assess technology needs, design implementation roadmaps, and connect with vetted vendors. Through ConnectTech, modernization becomes more affordable and efficient. 

A standout success: the partnership with Bridge Marketplace, Inc., a digital loan marketplace. This collaboration has enabled MDIs to grow their commercial balance sheets without hiring additional staff or incurring prohibitive loan acquisition costs. In just 18 months, it has generated $14 million in new loans across 10 MDIs. With its recent upgrade to support loan participation and syndication, MDIs can now share risk and expand lending capacity across the NBA network. This is a powerful example of how technology enables scale and collaboration that would be impossible for most MDIs to achieve alone. 

Unlocking Opportunities Through Fintech Partnerships 

Another promising path has been fintech and Banking-as-a-Service (BaaS) partnerships. These alliances give MDIs faster access to modern capabilities—from digital banking to new payment rails—while also opening doors to innovative customer-facing products. 

Some MDIs are even exploring partnerships that allow customers to buy, hold, and sell digital assets. As larger banks team up with custodians to integrate cryptocurrency services, MDIs are evaluating ways to ensure their customers aren’t excluded from the future of finance. 

But fintech partnerships come with risk. The space remains largely unregulated, and many MDIs lack the technical and compliance resources to fully mitigate exposure. Here, due diligence and strong risk management will make the difference between success and setback. 

Support from Regulators 

Recognizing these challenges, regulators have taken important steps: 

• FDIC has supported MDIs through initiatives like the Inclusion Tech Sprint and the Mission-Driven Bank Fund. 

• OCC’s Project REACh provides technical assistance, executive training, and access to capital. 

Without such resources, many MDIs risk falling further behind, forced to rely on outdated systems that expose them to fraud and leave communities underserved. 

Recent regulatory shifts also signal progress. The FDIC has lifted pre-approval requirements for crypto-related activities, and the new GENIUS Act provides clarity on issuing regulated stablecoins. Together, these steps lower barriers for banks considering digital asset offerings. 

Still, regulators must strike a balance—fostering innovation without disenfranchising MDIs or overwhelming them with compliance burdens. 

Breaking Through Core Technology Barriers 

Despite momentum, one of the greatest obstacles remains core banking systems. As the digital lifeline of financial institutions, outdated cores hinder innovation. High costs, rigid contracts, and inflexible pricing models limit MDIs’ ability to upgrade. 

This issue is so critical that we will dedicate a future blog post entirely to exploring core technology and its role in MDIs’ digital future. 

Looking Ahead 

While MDIs face real headwinds—from modernization costs to regulatory pressures—they are far from standing still. Through smart partnerships, shared resources, and regulatory support, they are laying the groundwork for a competitive, digitally enabled future. 

What sets MDIs apart isn’t just their adaptability. It’s their deep, enduring roots in the communities they serve. Their long-standing trust and mission-driven approach mean that when families and small businesses need advice, lending, or basic financial services, MDIs are there. 

As MDIs embrace this next era, they aren’t merely keeping pace. They are positioning themselves as vital engines of resilience, opportunity, and upward mobility for the communities that need them most. 

To learn more about the National Bankers Association's MDI ConnectTech program, click here.