Who Are We?

The Coalition for New Credit Models is made up of for-profit, non-profit, and social enterprises using new technologies, products and business models to provide credit and information to millions of consumers and small and mid-market businesses. These models serve as innovative alternatives to existing banking and financial institutions and are backed by venture and social capital to stimulate the economy, shore up financial markets, and enhance local communities. These models have a special focus on bringing transparency, fairness, durability, and accountability to consumers and to our credit markets. They represent new innovations, technologies, and services that were not possible - until recently. Most importantly, the members of this coalition are committed to providing responsible lending, financing, and market liquidity to a diverse range of individuals, families, and small and mid-market businesses with an emphasis on financial inclusion.

Whom Do We Serve and How?

Members of the Coalition for New Credit Models serve consumers, small and mid-market businesses across the credit, income, geographic, and cultural spectrum. Millions of Americans are in search of credit and financial services – many are consumers who lack credit scores, formal banking relationships, and cannot obtain loans at fair interest rates. These individuals have largely been ignored by most, if not all, of the incumbent financial services companies. This “underbanked” market is benefiting tremendously from nascent, alternative models and companies that provide a pathway to build credit and wealth in America.

Our coalition members also serve tens of millions of individuals, families, and small and mid-market businesses with great credit scores and good paying jobs, but may no longer have a home equity or small business line of credit to tap into. The diverse and innovative models that make up this coalition help individuals and small businesses, poor or wealthy, with or without credit, where legacy financial institutions have been absent, inefficient, or greedy.

By providing new micro-loans, access to working capital, advancements in risk scoring, more transparent marketplaces, and relevant products, coalition members are helping to enhance markets, reach the under-served, and empower individuals and small and mid-market businesses. Whether it is technology or banking the un-banked, members represent new models, new thinking and new a sense of responsibility in serving consumers and small and mid-market businesses. The coalition seeks to recreate the financial services industry from the ground up by empowering all consumers and small and mid-market businesses with more choice, relevant products, better access, increased transparency and improved systems.

Why Are New Credit Models Important Now?

The current financial crisis cannot be solved simply by fixing the traditional financial institutions, which proved to be opaque, fragile, and in some cases reckless. Navigating this ongoing financial crisis means embracing alternatives and new innovations that will make the country less dependent on any single point of failure, or institutions that are too big or too interconnected to fail. New companies and organizations are emerging to fill the void and to do so in a better, more responsible way. What solar panels and wind turbines are to the energy industry, alternative credit models are to financial services and consumer lending. They are new innovations that require new rules and fresh thinking to reach their full potential and mandate for change.

New credit models have many institutional obstacles and market players to overcome, but in a recent speech, even the Chairman of the Federal Reserve Board, Ben Bernanke highlighted the power and potential profitability of new credit models. “New investors have been drawn by the appeal of supporting low- and moderate-income communities while earning relatively good rates of return. … emerging peer-to-peer lending platforms, also hold promise.”

The White House has offered its vision of financial services regulatory reform. Many regulators and roles seem to remain the same; but the White House proposed a shift in responsibility for consumer financial products from the Federal Reserve Board to the new Consumer Financial Product Agency. Many of the innovations, services, and models represented by this coalition could be affected, for better or worse, by the administration’s significant regulatory proposals, which are currently winding their way through Congress.

Person-to-person lending, banking the underbanked, new commercial credit markets, and micro-lending are innovative models that don’t fit into neat regulatory boxes right now. As Congress considers new regulations for the financial services sector, these new models are holistically regulated, if they are regulated at all.

Photo by lumaxart