The Financial Solutions Lab – managed by CFSI with founding partner JPMorgan Chase & Co. – is excited to announce that the focus of this year’s Innovation Challenge is improving consumers’ financial health.
Why this broad topic? Because most Americans are struggling financially. Some 57% of the population – or 138 million adults – have difficulty managing their day-to-day financial lives, establishing a cushion for financial resilience and positioning themselves for financial security and mobility.
In years past, the Lab has focused its challenges around individual elements of financial health, such as helping households better manage cash flows or weather financial shocks.
This year, we’re broadening our search in order to encourage a greater diversity of solutions that address all kinds of obstacles on the financial health journey – whether consumers are just starting out, trying to develop a savings cushion, facing unexpected expenses like medical care or car repairs, or trying to retire without running out of financial resources.
We look forward to speaking and meeting with entrepreneurs to hear their vision for improving the financial health of all Americans.
What really gets us excited, though – and what we would like to see more of – are innovations that meet the financial needs of populations who are underserved and often-overlooked. Research shows that several populations lack financial health at greater rates than the overall U.S. population.
Massive numbers of baby boomers are shifting towards less than full-time work and millions more are entering retirement. According to U.S. Census data, 46 million Americans are over the age of 65 and Pew estimates that 10,000 people turn 65 every day. As this population lives longer on less, they face specific financial challenges around issues of retirement, insurance, healthcare and more. According to the Institute on Assets and Social Policy, one-third of senior households, for example, have no money left over at the end of each month or is in debt after meeting essential expenses.
Individuals with Disabilities
According to the 2013 U.S. Disability Status Report, more than 12% of the U.S. population lives with some form of hearing, visual, cognitive, ambulatory, self-care, or independent living disability. Universal design is good design and fintech providers have a clear opportunity to be leaders on this front. Beyond the goal of moving products and services – especially mobile apps – towards universal accessibility, we’d love to see innovators (and policymakers) make it easier for disabled consumers to work and save without losing vital government benefits.
People of Color
CFSI’s research shows that people of color lag behind the overall population on many indicators of financial health. For example, one indicator of financial health is having access to high quality credit. 15% of Black and Hispanics, however, are credit invisible – and an additional 13% of Blacks and 12% of Hispanics have un-scorable credit records. Across all financial health indicators, 77% of Blacks and 78% of Hispanics are more likely to struggle financially compared to 57% of the general population. There is a clear opportunity for fintech providers to find new ways to build trust and deliver high quality products and services that improve the financial health of this population.
It’s been well reported that women, on average, make less than men. And while income is important, closing the gender wage gap won’t close the gender wealth gap. Women own, on average, just 32 cents for every $1 that men own. Research from the Center for Financial Inclusion also shows that women on average pay an extra half percent APR on credit cards, which can add up to an estimated $165,000 over the average female lifespan. At the same time, women are statistically less likely to invest than men, missing an opportunity to have compound interest work for them. The gender wealth gap is even greater when broken down by race and marital status. For example, CFSI’s research shows that single female heads of households are more likely to pay in cash, receive irregular wages/salaries and have less than $1,000 in liquid assets and retirement savings compared to married households and the general population. We hope to see more innovative solutions that help women build their assets while maintaining a well functioning daily financial system.
While this is certainly not an exhaustive list, it highlights the unique challenges facing a number of communities in our country. We will highlight, in greater detail, some of the financial services needs of these groups and others over the next few weeks on our blog.
You should apply for the Lab if:
- You have a technology product that can help make more Americans financially healthy, period, regardless of the population you serve.
- You have a product that is leveraging technology to improve the financial health of any of the populations listed or any other vulnerable communities. We are especially interested in hearing from you.
You should reach out to the Lab if:
- You have deep consumer insights about these populations – or others – or direct access to consumers to pilot or distribute some of the Lab’s high-quality financial products. To learn more about partnership opportunities, email firstname.lastname@example.org.
At the Financial Solutions Lab, we believe it’s important to shine a spotlight on the financial services needs of the most vulnerable – and it’s our greatest hope that by doing so, we may spark greater ideas, bigger thinking, action, and ultimately – innovation that can make more Americans financially healthy.
For more information about the Financial Solutions Lab and the 2017 Innovation Challenge, visit us here.