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Data & Analytics Lending & Credit Risk Lending Regulation Portfolio Risk & CECL

CRA compliance: A data-driven strategy

Rob Newberry
March 21, 2025
Read Time: 0 min

 

This article covers these key topics:

Complying with enhanced CRA data requirements 

Most banks recognize that their enterprises can only thrive if their customers do, too. Partnering with local organizations to promote the health of their economic communities is often a top priority for banks. In recent years, financial institutions have faced increasing regulations regarding their efforts to serve the needs of diverse communities.

Updates to CRA compliance requirements

As the January 2026 deadline for full CRA compliance approaches, financial institutions must act now to ensure they have the right technology to streamline compliance, gain deeper insights into their CRA performance, and uncover new lending opportunities—while also maximizing their impact on the communities they serve. 

The Community Reinvestment Act (CRA) ensures that banks provide fair access to credit and other financial services. However, updates to the CRA introduced new requirements that make compliance more complex.  

To keep up with the CRA’s requirements, many of which center on enhanced data collection, banks must take a more data-driven and strategic approach to compliance. Data collection and analysis will be key to complying with the CRA’s expectations for enhanced data collection, expanded assessment areas, and tiered performance evaluations, 

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CRA compliance by bank size: What’s required? 

The latest CRA framework categorizes banks (CRA requirements are not extended to credit unions) into three tiers based on asset size, with differing compliance requirements: 

  1. Small banks (assets under $600 million) 
  • Must report on loan distribution and loan-to-deposit ratios. 
  1. Intermediate banks (assets between $600 million and $2 billion) 
  • Required to include Retail-Based Assessment Areas (RBAAs) in reporting if more than 50% of retail loans were originated outside of Facility-based Assessment Areas (FBAAs). 
  • Can continue using the existing Community Development Test or opt into the new Community Development Financing Test. 
  1. Large banks (assets above $2 billion) 
  • Mandatory participation in all new CRA performance tests. 
  • Must comply with strict benchmarks for lending, investment, and community development initiatives. 
  • If originating more than 150 home mortgages or 400 small business loans per year, required to report RBAAs. 

Institutions that fail to meet CRA performance expectations risk regulatory scrutiny, reputation damage, and barriers to growth, particularly for mergers and acquisitions. 

Understanding CRA compliance updates 

The updated CRA framework reflects a shift toward more rigorous, data-driven evaluations of how banks serve low- and moderate-income (LMI) communities. The new requirements emphasize: 

  • Enhanced data collection and transparency: Banks must report detailed lending data, including geospatial and demographic analytics, to demonstrate community impact. 
  • Performance-based assessment: CRA ratings now depend on both quantitative metrics (loan volume and distribution) and qualitative factors (community engagement). 
  • Expanded assessment areas: Institutions must now evaluate lending activity beyond their physical branch locations, considering both Facility-Based and Retail-Based Assessment Areas. This means more data must be collected and reviewed than under the previous requirements. 

With these changes, institutions need real-time visibility into CRA performance to ensure compliance and maximize lending impact. However, many financial institutions struggle to extract insights from siloed data sources like core systems, spreadsheets, loan files, and treasury services. Banking intelligence solutions help solve this challenge by centralizing CRA-related data, improving reporting accuracy, and enabling real-time analytics. 

How data analytics can simplify CRA compliance 

Adapting to the new CRA guidance requires a multifaceted approach. Financial institutions may face challenges integrating new data requirements with legacy systems. Smaller banks, in particular, may struggle with the resources required to meet the enhanced compliance standards because of the expanded array and amount of information expected. The following strategies can help institutions align their operations with regulatory expectations.   

Governance and oversight 

  • Establish a dedicated CRA committee: Financial institutions should create a high-level CRA committee to oversee compliance initiatives. This committee should include senior management and representatives from key business units, including staff familiar with existing data systems, their capabilities, and their limitations. 
  • Regular audits and reviews: Implement periodic internal and external audits to assess compliance with CRA requirements. These reviews should focus on both the effectiveness of internal controls and the accuracy of reported data. 

Data collection, analysis, and reporting 

  • Invest in data infrastructure: Modernize your systems to capture and analyze lending, investments, and community services data. This includes geospatial mapping tools to identify underserved areas. 
  • Develop robust reporting mechanisms: Ensure that data reporting meets the enhanced transparency and disclosure standards. Create dashboards and regular reports that track performance against key CRA metrics. Dashboards should allow for a centralized, real-time view of data so the bank can have an up-to-date view of how it is tracking for CRA compliance rather than waiting for exam results. 
  • Demographic metrics: Since new quantitative thresholds will measure the proportion of loans made to LMI individuals and businesses relative to overall lending, lenders need to be able to analyze lending data against local income levels, economic stability, and other key demographic factors. Having data accessible as lending occurs can ensure that credit reaches LMI populations 
  • Benchmark performance: 
    Establish benchmarks based on both historical data and industry standards. Use these benchmarks to assess performance and to identify trends that may inform future community investment strategies. 

Risk management and internal controls 

  • Integrate CRA into risk frameworks: Ensure that community reinvestment initiatives are part of the institution's overall risk management strategy. This includes identifying risks associated with underinvestment in communities and addressing them proactively. 
  • Training and awareness programs: Conduct training sessions for employees to ensure they understand the new CRA requirements and the importance of community engagement. This helps in fostering a culture of compliance and accountability. 
  • Scenario analysis and stress testing: Perform scenario analyses regularly to understand how various economic conditions might affect CRA performance. Stress testing can help institutions prepare for adverse conditions while meeting community needs. 

Staying ahead in a data-driven CRA environment

As financial institutions prepare for the January 2026 deadline for full compliance, now is the time to invest in the right technology to manage CRA data efficiently. Data analysis tools can help banks visualize their CRA performance, streamline compliance efforts, and unlock new lending opportunities—all while ensuring that their investments have a measurable impact on the communities they serve. A proactive, analytics-driven approach will not only ensure regulatory compliance but also enhance community engagement and business growth. 

Ready to simplify CRA compliance? Learn how Abrigo can help.

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About the Author

Rob Newberry

Senior Consultant
Rob Newberry is Senior Consultant with Abrigo’s Advisory Services and a faculty member of the Graduate School of Banking at the University of Wisconsin-Madison. In the past 10 years, he has worked with financial institution leaders and regulators to develop a suite of credit administration tools for community banks and

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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