Filene Research Institute Unveils Four Products to be Tested in Accessible Financial Services Incubator

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Ford Foundation grant enables the scaling of products to benefit low-and-moderate-income consumers

Filene Research Institute announced today four financial products to be tested in its new accessible financial services incubator. Funded by a grant from the Ford Foundation - http://www.fordfoundation.org, the incubator will test, package and scale innovative, viable financial products that benefit low-and-moderate-income US consumers.

“We searched nationwide to find financial products that are innovative in ways that benefit low-and-moderate-income consumers,” said Cynthia Campbell, director of innovation labs at Filene. “These products, chosen from more than 20 submissions, show promise of doing just that.”

“Using credit unions as the proving ground, we’ll test these four products’ viability with mainstream financial institutions, in addition to one more product to be determined, during an 18-month product incubation beginning in January 2014,” said Campbell.

The products to be tested include:

Non-Prime Auto Lending by the National Credit Union Foundation. Access to reliable transportation allows for increased access to jobs, housing, schools and activities. But many credit-challenged consumers lack reliable transportation. This program helps lenders fairly price and manage non-prime auto loans, incorporating the LIFT idea introduced by Filene i3 - http://filene.org/research/i3-project/lift.

Borrow and Save by the National Federation of Community Development Credit Unions. This product increases consumers’ economic security of by providing an affordable small dollar loan with a payment term that makes sense for them. A built-in savings component also enables consumers to self-fund their emergencies instead of borrowing money to handle them.

Pay Yourself Back by Innovations in Poverty Action. As an add-on to any loan type, this product seamlessly converts borrowers into savers. Leveraging the habits formed by regularly making loan payments, it encourages consumers to keep making regular payments (or a portion of it) to themselves after the loan is paid off.

Employer Sponsored Income Advance Loan by NorthCountry Federal Credit Union. This small dollar loan program is offered to employees of the Select Employer Groups (SEGs) partnered with credit unions. Loan payments are auto-deducted from direct deposited paychecks. Once the loan is paid, employees may continue making payments into savings accounts.

Filene is still looking for forward-thinking credit unions to test potential products. Contact Cynthia at cynthiac(at)filene(dot)org or 608.886.0087 for more information.

An advisory panel of financial institution staff, researchers and industry analysts helped Filene select the products. The panel includes: Stephen Arnold, CUNA Mutual Group; Amy Brown, Ford Foundation; Victoria Cheng, Core Innovation Capital; Linda Garboczi, Andrews Federal Credit Union; George Hofheimer, Filene Research Institute; Dan Hoover, Filene Research Institute; Christopher Kopka, Brightpeak Financial; Crystal Long, Government Employees Credit Union; Annamaria Lusardi, George Washington University; Mark Meyer, Filene Research Institute; Jon Reske, U-Mass/Five College Federal Credit Union; Eileen Rivera, SkyOne Federal Credit Union; Soma Sarkar, Credit Union of New Jersey; Steve Webb, Neighbors Federal Credit Union; and, Linda Young, self-employed.    

About Filene: Filene Research Institute is an independent, consumer finance think and do tank dedicated to scientific and thoughtful analysis about issues affecting the future of credit unions, retail banking and cooperative finance. Filene is a 501(c)(3) nonprofit organization. Nearly 1,000 members make the Institute’s research, innovation and impact programs possible.

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Kate Lawton
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since: 06/2009
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