Wilmington-based firm nCino recently created a software solution aiming to ease banks’ aches and pains as they adapt to a new federal data requirement. 

The company enhanced its Small Business Banking Solution to allow the capture of relevant data required by the Final Rule issued last March by the Consumer Financial Protection Bureau (CFPB).

That Final Rule, part of the Dodd-Frank Act of 2010 Section 1071, requires lenders to collect and submit data showing they are engaging in fair lending, especially concerning minority and women small business owners. 

This part of the act has been a contentious issue for years but went into effect in August for the largest financial institutions, termed Tier 1. Smaller banks, credit unions and nonbank lenders – Tiers 2 and 3 – must comply later.

“While we’re obviously aware of the ongoing litigation – people contending and delays to the implementation of Dodd-Frank 1071 – our position as software providers is that we want to partner with our institutions to build solutions that make it easier for them to comply,” said Pierre W. Naudé, nCino’s principal product manager – small business experience and son of nCino CEO Pierre Naudé of the same name. 

“No one is against fair lending; it’s just the way [reporting] is being asked to be done that they object to,” he said.

nCino’s new product captures relevant data as part of a customer’s loan origination workflow and exports it for Dodd-Frank 1071 compliance.

Peter Gwaltney has heard complaints from the financial industry about this new requirement.

“[Lenders] that make loans in excess of 100 per year are required to collect data from their applicants and report it annually to the CFPB,” Gwaltney, president and CEO of the N.C. Bankers Association, said in December. “There is a large number of data points. The rule puts banks in a position they don’t want to be in. They have to explain to their customers why they are doing it; the customers won’t like it. [The information] is beyond what a bank would normally ask.”

Gwaltney said compliance would require lending institutions to invest more in software and staffing, a requirement that would be especially hard on small banks and credit unions.
nCino’s new software aims to solve the problem.

“Because banking is a highly regulated industry, it’s our responsibility to build tools that make it easier for them to comply,” Pierre W. Naudé said.

Asked about Gwaltney’s remark that compliance would place a greater burden on smaller lenders, who would have to spend scarce resources on software and staffing, Pierre W. Naudé said nCino’s software does aim to level the playing field.

“A lot of the biggest banks have to report first,” he said. “They could have built their own solution, but many of them are choosing to use ours. Smaller banks in Tier 2 and Tier 3 will benefit from [the refined] version of our software.”

Meanwhile, there’s work to do.

“These rules get interpreted differently by different banks,” Pierre W. Naudé said. “We’re trying to make one solution for everybody. nCino expects a lot of conversation around what feedback can everyone benefit from versus what individual issues need to be worked out with a specific institution.”

Correction: This version corrects the section number of the Dodd-Frank Act.