JPMorgan Chase & Co. and the Center for Financial Services Innovation (CFSI) have collaborated on the Financial Solutions Lab, a new $30 million, five-year initiative that brings together social entrepreneurs and leading experts in technology, behavioral economics and design to improve financial capability.
This cross-industry initiative intends to catalyze the development of innovative, technology-enabled strategies, products and services that align with consumers’ financial needs.
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"Living outside the financial mainstream puts financial security further out of reach for one out of every four American households that rely on high-cost, non-bank services to manage their finances," said Bruce McNamer, Chief Executive Officer of the JPMorgan Chase Foundation. "The Financial Solutions Lab will bring together the best and brightest to identify innovative solutions that help consumers increase savings, improve credit and build assets."
Over the course of the next five years, the Financial Solutions Lab will host a series of competitions for social entrepreneurs to identify products and services designed to help consumers improve their financial health. Leading ideas will be able to be supported with capital, technical assistance and third-party evaluation.
"CFSI has spent the last decade understanding the financial needs and behaviors of consumers and has a strong track record of seeding promising innovations that help to address them," said Jennifer Tescher, CEO of CFSI. "Now that financial capability has become the norm, this Lab is the opportunity to scale powerful ideas that will impact millions of Americans."
In a new white paper released by the University of North Carolina at Chapel Hill and JPMorgan Chase, evidence from a broad set of research highlights that financial insecurity is a problem not limited to individual households, but also has consequences for employers, taxpayers, and the economy.
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By GlobalDataFamilies living paycheck to paycheck experience even greater financial insecurity when they live outside the financial mainstream. They lack opportunities to save and build credit, which are critical building blocks for stability and economic mobility. For example, 71 percent of children born to high saving, low-income parents move up from the bottom income quartile over a generation.
However, experts estimate that fewer than 10 percent of working households are positioned for a financially secure retirement and more than half of Americans lack an emergency savings fund.[3] As a result, individuals and households are increasingly vulnerable to financial setbacks that limit their economic mobility.
The Financial Solutions Lab intends to promote the development of products and services to tackle these challenges and promote opportunities for households to improve financial stability, financial security, and – eventually – economic mobility.
The Financial Solutions Lab will assemble a team of technology experts, leading nonprofits and consumers advocacy groups, behavioral economists and academics to provide ongoing guidance, share best practices and support the development of scalable financial solutions based on the Financial Solutions Lab’s winning innovations.
ideas42 and IDEO.org will serve as strategic advisors, and together with JPMorgan Chase, will be instrumental partners in the Financial Solutions Lab’s design, implementation and capacity.
"We need to put consumers’ needs at the center of the design process and offer solutions that have sustained long term impact," said Patrice Martin, co lead and creative director at IDEO.org.
"So far, efforts to address financial insecurity have largely focused on increasing awareness and knowledge," said Josh Wright, Executive Director, ideas42. "But research has shown the need to identify strategies that help consumers overcome these barriers to promote better financial behavior. By leveraging behavioral insights, we hope to create scalable, sustainable products and services to promote financial security."
The Financial Solutions Lab will establish criteria for measuring impact in order to continuously evolve efforts to help individuals households achieve greater financial security and contribute real-time learnings to the broader field of financial capability.
