From Wall Street to Main Street: Inside the FinTech Helping Companies Invest in Communities

Sponsored: This women-led firm has a solution to make investing in racial equity easier and more transparent.

Catherine Berman and Yuliya Tarasava each had more than a decade of experience in finance when the market crashed in 2008. As they witnessed financial innovations exacerbate economic inequality in the wake of the Great Recession, an area of untapped potential stood out to them.

“I come from an Argentine family that made it in this country because of entrepreneurship,” Berman says. “The importance of capital and entrepreneurship as a vehicle for financial freedom and wealth creation is not lost on me personally.”

In 2016, the two women decided to leave traditional finance and prove that financial innovation could be used as a tool to bridge economic disparities. The result was CNote, a women-led B Corporation and FinTech that connects investors of all sizes with community financial institutions (CFIs) across the U.S. Their mission is to use technology to unlock diversified community investments that can increase economic mobility and financial empowerment.

“Supporting pillars of financial freedom, such as homeownership, education and entrepreneurship creates growth and resilience that benefits everyone,” Tarasava says.

Community financial institutions are often the drivers of economic opportunity in underbanked local economies. These organizations are “already on the front line of economic justice, offering responsible financial products, access to capital and financial coaching every day to pockets of communities across the country,” Berman says. By investing in CFIs through CNote, companies can invest in the economic development of local communities.

CNote’s platform harnesses the power of FinTech to increase the flow and speed of capital to underserved communities. Through CNote, which is a part of the Mastercard Strive USA program, companies can more easily invest and diversify their cash by deploying it to CFIs in addition to the large banks they normally use.

The platform also makes the investment process more reliable, transparent and seamless for CFIs and investors by streamlining deployment of deposits to multiple CFIs across the country. By doing so, CNote creates the space for companies to become new sources of capital and leverage their assets to drive inclusive economic development.

A 2023 McKinsey Institute analysis highlighted the difficulties companies can face when trying to create social change through funding — even when they have the best intentions.

That’s where CNote comes in. Companies can use the platform to make deposits into mission-driven financial institutions, which increases the institutions’ balance sheets and allows them to make more loans to underserved entrepreneurs. This is a way to support marginalized communities in a long-term, sustainable way. The technology is designed to be easy to use and allows companies to target geographic regions or banks that are significant to them or would benefit the most from their capital.

It’s attracted the attention of a growing host of companies, including Xylem, a global water technology provider that enables sustainability and water equity through its commitment to solving water infrastructure challenges. Using the CNote platform, Xylem has invested $7 million dollars into community financial institutions in underserved communities across the U.S.

Xylem was already a mission-driven company when they found CNote. “Challenges around water disproportionately impact disadvantaged communities,” says Claudia S. Toussaint, chief people and sustainability officer for Xylem.

Since they began their partnership with CNote in 2020, Xylem has made investments in 28 different communities across the US. Roughly 20% of their investment dollars are allocated to rural areas where there are significant water challenges.

“We selected CNote because of their ability to evaluate the partner banks, run due diligence, and then present them to us,” says Sandy Rowland, CFO of Xylem. Working with CNote empowered her to drive social impact while managing risk for the enterprise with FDIC-insured deposits and by spreading investment dollars across a wider range of financial institutions. “We knew we had made the right choice after they helped us prioritize our investment and ensure every dollar was being used in a meaningful way.”

According to Berman, Xylem’s results demonstrate that “this type of corporate finance, innovation and impact transcends industries.”

“Those are our favorite types of partners,” Berman says. “They were really thoughtful about caring about the integrity of this program. They really sought to put deposits to work in a meaningful, authentic way.”

That clear impact is also what drew Strive USA to CNote. CNote was one of the first Strive USA grantees and was a member of Mastercard’s Start Path program, the company’s global startup accelerator program. CNote and Strive USA share a belief that technology can enable access to capital for CFIs, which in turn can strengthen the pipeline of investments into small businesses.

“Strive USA is working to diversify and grow financing for CFIs,” says Sandy Fernandez, vice president, North America, Mastercard Center for Inclusive Growth. “By partnering with CNote, we aim to introduce an entire new class of investors to CFIs using a digital approach to connect Wall Street with Main Street.”

The partnership with Strive USA allowed CNote to “deepen [their] technology and get those dollars flowing,” Berman says. According to their Annual Impact Report, capital on the CNote platform exceeded $300 million dollars in 2022. “When working with impact investors, you have to make it easy. You have to make it transparent and trackable. That’s really a technology play. That’s really a data play.”

In addition to helping companies invest their dollars in better causes, the tool sends more money to CFIs and other mission-driven lenders, many of whom serve small businesses that are not able to receive funding through traditional pathways. Since its inception, over 50% of the capital invested through CNote went to BIPOC-led small businesses, while over 40% of capital was invested into women-led small businesses.

Berman says that there is not enough appreciation for the “firepower and economic gusto that our small business community creates.” Small businesses generate two of every three jobs added to the economy. Yet, “without the access to capital and the access to networks,” Brennan says, “you don’t actually get a movement toward creating and then having a thriving small business.”

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Bianca Gonzalez (she/they) is a writer intent on using words as a tool for social change. She is a solutions journalist for Next City, a case study writer for Community Solutions, and a daily news writer for Biometric Update. As a queer, Latina brain cancer survivor, she believes that justice is fundamentally intersectional.

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Tags: small businesscdfismastercardinvestmentfintech

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