Nearly 18 months ago, Congress, the White House, and the financial services industry undertook an unprecedented joint effort to inject hundreds of billions of dollars into the economy through loans to millions of small businesses. The Paycheck Protection Program (PPP) would eventually distribute over $800 billion in just 13 months with the disbursement of 80% of the loans in the first six months alone. Community development financial institutions (CDFIs), minority depository institutions (MDIs), credit unions, community banks, fintechs, regional banks, and three of the 10 largest banks in the world mobilized alongside the U.S. Department of Treasury and the U.S. Small Business Administration to push back an economic crisis that was growing by the hour.

What made this program so successful was that the federal government opened the doors to the next generation of innovators and lenders who could reach communities previously excluded from these kinds of programs. Leveraging these next-generation lending platforms in partnership with traditional institutions kept millions of American small businesses afloat, particularly in minority and marginalized communities.

The unparalleled diversity of our financial services industry — often a source of frustration for providers and regulators alike — served us well in this emergency. PPP prioritized partnership, speed and access over the processes and parochial interests that had limited the impact of too many of the programs designed and implemented during the 2008 financial crisis. Unfortunately, many of the directly administrated Coronavirus Aid, Relief and Economic Security (CARES) Act programs that did include innovative technology-based solutions continue to struggle with uptake and disbursement.

Recent studies by the Federal Reserve Bank of New York, the Federal Reserve Bank of San Francisco and the U.S. Government Accountability Office all found that fintechs played an essential role in serving borrowers that would have otherwise been unfairly excluded.

These studies found that large banks primarily served their existing customers. Ninety-five percent of large bank applicants had prior relationships with that bank. Research by the Federal Reserve Bank of San Francisco demonstrated that between February 2020 and April 2020, the number of Black and Latino business owners declined by 41% and 32%, respectively, compared with 17% for white business owners. As this reality became apparent in the earliest weeks of PPP, program rules were amended to dramatically expand the inclusion of fintechs among the qualified lenders vastly improving access. The actions of all providers proved to be complementary in fulfilling the intent of Congress in passing the CARES Act and additional related legislation.

A study released earlier this month by researchers at NYU Stern School of Business, National Bureau of Economic Research, Ocrolus and the University of Chicago further evidenced the imperative role fintechs played in creating equity through the PPP program. The study found that Black-owned businesses were 12.1 percentage points more likely to obtain their PPP loan from a fintech lender than a traditional bank. They also found that the automated underwriting processes of fintech lenders, which increasingly rely on artificial intelligence and machine learning, may help reduce racial discrimination.

It is essential that the financial services industry and the federal government focus on constructing policies and systems that embrace innovation and expand financial access. Critical issues such as the development of digital identity standards, reforming a dysfunctional bank secrecy act/anti-money laundering regime, and modernizing the payments system need immediate attention.

PPP showed that the government and industry working together can begin addressing the long-standing structural exclusion of far too many Americans. Partnerships with traditional financial institutions and fintech platforms can enable the Administration and Congress to better design and implement beneficial public programs that pave the way for a more open and equal tomorrow.

Garry Reeder served as chief of staff at the Consumer Financial Protection Bureau (CFPB), where he helped develop the Project Catalyst program focused on fostering consumer-friendly innovation. He also served as the FDIC deputy representing the CFPB and was a member of the Financial Stability Oversight.