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Financial Solutions Lab Launches $3 Million Competition to Improve the Financial Health of Overlooked Populations

JPM | February 22, 2017

Financial Solutions Lab Launches $3 Million Competition to Improve the Financial Health of Overlooked Populations

Virtual fintech lab launched by CFSI and JPMorgan Chase helps fintech startups improve and scale solutions for people of color, low-income women, aging populations and people with disabilities

Today the Financial Solutions Lab (FinLab) at the Center for Financial Services Innovation (CFSI) with founding FinLab partner JPMorgan Chase & Co. officially launched its third annual $3 million challenge to identify tech-enabled innovations that improve the financial health of Americans. The $30 million, five-year virtual lab initiative unveiled Financial Health as the broad theme for its third-year challenge, with a special interest in solutions geared toward the unique needs of often overlooked segments, including people of color, the aging, people with disabilities and low-income women.

FinLab provides each winning organization with $250,000 in capital, support from FinLab operating partners IDEO.ORG and ideas42, strategic guidance from its industry-leading advisory council, and resources from founding partners CFSI and JPMorgan Chase, including the JPMorgan Chase employee mentorship program. The importance of this new challenge topic was determined using CFSI’s Consumer Financial Health Survey, JPMorgan Chase Institute research as well as research from other thought leaders.

“The consumer impact of FinLab companies to date has been really astounding,” said Ryan Falvey, Managing Director at CFSI. “The 18 organizations supported by the lab so far have cumulatively grown to help more than one million Americans improve their financial health — 10 times the consumer base they served before joining the lab. First year Lab winner Digit, for example, has helped clients save more than $350 million. And EARN, part of the lab’s second class, found that 83 percent of its clients develop a habit of savings, with low-income households saving an average of $558 over six months. We expect this level of impact to continue with the next class of FinLab innovators.”

“Technology can help us reach overlooked populations with more affordable and convenient financial products and services that can promote financial health,” said Colleen Briggs, Executive Director, Community Innovation, JPMorgan Chase. “But to unlock this potential, we want to see more innovators who understand these communities and are designing solutions that meet their needs and preferences.”

Research shows that certain segments of the population are disproportionately struggling with their financial health.

People of Color: Over two-thirds of African-American and nearly three-fourths Latino households lack the savings to recover from a traumatic financial event (job loss or medical emergency).ⁱ
Aging Americans: Older families experienced higher expense volatility while often managing against fixed incomes. Forty-four percent of families 65 and older made an extraordinary auto-, medical-, or tax-related payment.ⁱⁱ
People with Disabilities: Households with disabilities were much less likely to save for unexpected expenses. Thirty-nine percent of household with disabilities compared with 61 percent of households with no disabilities saved for unexpected expenses or emergencies in the past 12 months.ⁱⁱⁱ
Low-income Women: For every $1 that men own, women own, on average, 32 cents. That gap is even greater broken down by race, with African-American and Latina women owning less than one cent for every $1 owned by a white man. Regardless of race, many mothers face the "motherhood penalty" in the workplace. Low-wage working mothers see their wages decrease 7% for each child they have.^{iv v}

Applying for the Challenge

FinTech innovators interested in joining FinLab’s third year class can now complete and submit an application at http://finlab.cfsinnovation.com. There are two “rounds” for this year’s challenge, with deadlines set for March 16 and April 27, 2017. Winners will be announced on stage at the EMERGE Forum 2017, held June 15-17 in Austin, Texas.

FinLab Success

Also today, FinLab celebrated the culmination of its second cohort of nine fintech innovators. FinLab’s first and second challenges, focused on solving consumer cash flow issues and financial shocks, respectively, drew more than 600 total applications from companies and nonprofit organizations serving more than 10,000,000 Americans combined.

To date, the Financial Solutions Lab has supported 18 financial technology companies offering innovative financial products to help more than one million Americans improve their financial health, a 10x growth since joining the lab. Collectively, FinLab companies have raised over $100,000,000 in capital since joining the program.

The two FinLab classes to date include Albert, bee, EARN, EarnUp, eCreditHero, Everlance, Remedy, Scratch, and WiseBanyan from the just-completed Year Two, and Ascend Consumer Finance, Digit, Even, LendStreet, PayGoal by Neighborhood Trust, Prism, Propel, Puddle and SupportPay from Year One.

“Creating new products is difficult, particularly in a space dominated by a few large players,” said Sameh Elamawy, co-founder of Scratch. “Having CFSI's knowledge and connections at our fingertips, as well as the resources of our mentors at JPMorgan Chase, has made a tremendous difference in our product design.”

Leigh Phillips, CEO of nonprofit Lab member EARN, echoes those sentiments. "Our experience with the Lab has far exceeded any expectations we may have had," said Phillips. "In just a few short months, we've expanded our user base more than ten-fold across all fifty states and we can directly attribute those new savers to connections that the FinLab helped us make."

STATEMENTS OF SUPPORT

“Working-age people with disabilities are more than twice as likely to be living in poverty as those without disabilities (28.5% compared with 11%),”said Tom Foley, Deputy Director, World Institute on Disability. “Shining a light on the unique challenges that this population faces, in an effort to identify financial tools to support their financial health and stability, is critically important. World Institute on Disability applauds the Financial Solutions Lab and looks forward to being a part of this important work.”

"It's no small feat to help more than one million Americans improve their financial health," said Andrea Levere, President of CFED. "As a member of the FinLab's Advisory Council, I've been greatly impressed with the quality and innovation of the companies supported by this program. I'm excited to see real financial solutions directed to helping consumers who are often overlooked."

“We all need safe ways to help build, manage, and protect savings over our lifetimes. With increasing longevity and a growing aging population, it has never been more urgent to solve these challenges,” said AARP Chief Public Policy Officer Debra Whitman, Ph.D. “AARP applauds the Center for Financial Services Innovation’s Financial Solutions Lab for launching their competition to develop innovative approaches to help families build and maintain their financial resilience as they age.”

“Now more than ever, older Americans are facing increasing levels of debt and financial insecurity,” said Laura Carstensen, Director of the Stanford Center on Longevity. “Innovation is critical to tackling this issue and we are encouraged to see the Center for Financial Services Innovation’s Financial Solutions Lab challenging the fintech industry to play an important role.”

About the Financial Solutions Lab

The Financial Solutions Lab is a $30 million, five-year initiative managed by the Center for Financial Services Innovation (CFSI) with founding Lab partner JPMorgan Chase & Co. to identify, test and expand the availability of promising innovations that help Americans increase savings, improve credit, and build assets. The lab will launch a series of competitions to identify solutions to specific consumer financial challenges. It will provide incentives for entrepreneurs, businesses, and nonprofits to enhance financial products and services that address these challenges and improve consumers’ financial health. For more information, visit http://finlab.cfsinnovation.com .

About the Center for Financial Services Innovation (CFSI)

CFSI is the nation’s authority on consumer financial health. CFSI leads a network of financial services innovators committed to building a more robust financial services marketplace with higher quality products and services. Through its Compass Principles and a lineup of proprietary research, insights and events, CFSI informs, advises, and connects members of its network to seed the innovation that will transform the financial services landscape. For more on CFSI, go to www.cfsinnovation.com and follow on Twitter at @CFSInnovation .

About JPMorgan Chase & Co.

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.5 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its JPMorgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

ⁱ http://www.globalpolicysolutions.org/wp-content/uploads/2014/04/Beyond_Broke_FINAL.pdf

ⁱⁱ JPMorgan Chase Institute, Coping with Costs: Big Data on Expense Volatility and Medical Payments . In its Coping with Costs report, JPMorgan Chase Institute defines “extraordinary payments” as large in magnitude: At least $400 in magnitude and more than 1 percent of annual income; and unusual: More than 2 standard deviations away from the individual’s normal monthly mean expense in this category.

ⁱⁱⁱ (NDI, Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households, forthcoming)

^iv Asset Funders Network

^v Center for Global Policy Solutions