Of course. This is a very timely and important topic in the financial and technology sectors.

Here is a comprehensive breakdown of Section 1071 Technology Solutions, covering what they are, why they're needed, who they're for, and the key players in the space.

Executive Summary

Section 1071 Technology Solutions are software platforms and services designed to help financial institutions—especially small and medium-sized banks and credit unions—comply with the data collection and reporting mandates of Section 1071 of the Dodd-Frank Act.

These mandates require lenders to collect and report extensive data on small business loan applications, including demographic information about the business owners (e.g., race, ethnicity, gender). The goal is to enhance transparency and help identify potential discriminatory lending patterns.

1. What is Section 1071?

• The Law: A provision within the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.


• The Mandate: Requires financial institutions to collect and report data on credit applications from women-owned, minority-owned, and small businesses.


• The Enforcer: The Consumer Financial Protection Bureau (CFPB) is responsible for implementing the rule.


• The Purpose: To facilitate the enforcement of fair lending laws and enable communities, creditors, and the public to identify business and community development needs and opportunities for women-owned, minority-owned, and small businesses.

2. The Core Compliance Challenge & The Need for Technology

Complying with Section 1071 manually is a massive operational burden. The required data points are extensive and go far beyond typical underwriting information.

Key Data Points that Must Be Collected & Reported:

• Application Details: Date, type, amount, action taken (approved/denied), etc.


• Pricing Information: Interest rate, origination fees, etc.


• Census Tract: The geographic location of the business.


• Demographic Data: This is the most complex part. Lenders must collect:


• The applicant's minority-owned, women-owned, and/or LGBTQI+-owned status.


• The race, ethnicity, and sex of the business's principal owners.


• Crucially, this data must be collected based on "self-identification" from the applicant, not the lender's observation.

• Data Aggregation: Pulling data from disparate systems (LOS, CRM, core).


• New Data Collection: Creating new, compliant workflows to collect sensitive demographic data without violating other laws (like ECOA).


• Standardization: Ensuring data is formatted correctly for the CFPB's submission.


• Reporting: Compiling and submitting the data to the CFPB annually.


• Risk of Error: Manual processes are prone to errors, leading to regulatory scrutiny and potential penalties.

3. What Do Section 1071 Technology Solutions Do?

These solutions automate and streamline the entire compliance lifecycle.

Core Functionalities:

• Integrated Data Collection:


• Embed compliant data collection forms (with self-identification prompts) directly into the online loan application and portal.


• Provide tools for loan officers to collect this data during in-person or phone applications while maintaining an audit trail.


• Workflow Automation & Management:


• Automatically flag incomplete applications missing 1071 data.


• Route applications through the proper compliance checkpoints.


• Send automated reminders to applicants or loan officers to complete required fields.


• Data Mapping & Aggregation:


• Connect via API to a lender's existing Loan Origination System (LOS), core processor, and CRM.


• Automatically map and aggregate the required 80+ data points into a standardized format.


• Data Validation & Scrubbing:


• Validate data for accuracy and completeness (e.g., correct census tract coding, valid NAICS codes).


• Identify and flag potential data integrity issues before submission.


• CFPB-Compliant Reporting:


• Generate the final submission file in the exact format specified by the CFPB.


• Often include a "pre-submission" review and validation check.


• Analytics & Dashboarding:


• Provide internal dashboards to monitor lending patterns and portfolio health.


• Help lenders proactively analyze their own data for fair lending risk.

4. Who Needs These Solutions?

• Banks and Credit Unions: Especially community and regional institutions that lack the large in-house compliance/IT teams of mega-banks.


• Non-Bank Lenders: FinTechs, online lenders, and other financial companies that extend credit to small businesses.


• Loan Origination System (LOS) Vendors: Many LOS providers are partnering with or building their own 1071 modules to offer a seamless solution to their clients.

5. Key Players in the Section 1071 Tech Solution Space

The market is evolving rapidly, but key players include:

Category 1: Specialized Compliance & RegTech Providers

• Ncontracts: Offers a robust risk and compliance management suite with a dedicated 1071 solution.


• Middleton: A long-standing leader in HMDA and CRA compliance, now offering a 1071 solution.


• QuestSoft: Well-known for its HMDA and CRA compliance software, with a strong 1071 offering.


• BankPoint: Specializes in bank productivity software with a focus on compliance, including 1071.

• FIS, Fiserv, Jack Henry: The major core processors are developing solutions for their thousands of bank and credit union clients.


• LOS Providers (e.g., Baker Hill, Abrigo, MeridianLink): Many are integrating 1071 compliance directly into their lending platforms.

• Aspiring: A modern platform built specifically to help community lenders manage 1071 and other complex compliance needs.


• Various FinTechs: Many newer lending platforms are building 1071 compliance from the ground up as a core feature.

6. Choosing a Solution: Key Considerations for a Lender

When evaluating vendors, a financial institution should ask:

• Integration Capabilities: How easily does it connect with our existing LOS, core, and digital banking platforms?


• Data Collection Methodology: How does the solution facilitate compliant, self-reported data collection in both digital and manual channels?


• Ease of Use: Is the interface intuitive for both loan officers and back-office compliance staff?


• CFPB Alignment & Updates: How quickly will the vendor adapt to any changes or clarifications from the CFPB?


• Scalability & Support: Can the solution handle our application volume, and what level of customer support is provided?


• Cost: Is it a SaaS subscription, a one-time implementation fee, or a per-application cost?

Conclusion

Section 1071 represents a seismic shift in small business lending compliance. For most lenders, attempting to manage this with spreadsheets and manual processes is not only inefficient but also highly risky. Section 1071 technology solutions have become an essential investment, transforming a complex regulatory burden into a manageable, automated, and integrated business process.