Only 29 percent of all Americans and roughly 10 percent of people with incomes below $30,000 are financially healthy, according to the US Financial Health Pulse 2019 Trends Report. This means that their daily financial systems enable them to spend, save, borrow, and plan effectively; be resilient; and pursue opportunities. In 2019, the Financial Health Network implemented a pilot study to explore how financial technology (“fintech”) products might fit into financial coaching programs aimed at helping clients with low incomes build their financial health.
The study evaluated the distribution of three fintech products:
- SmartyPig, an online high-yield savings account used to build a down payment for a house or to pay off debt
- Goalsetter, a savings platform designed for parents and families to teach children financial literacy
- Earnin, a mobile application that lets users “cash out” before payday
Urban’s evaluation found that the participating nonprofits gained valuable knowledge about the potential benefits of fintech for their clients, as well as insights on how to match products to client needs and preferences. At the client level, we found limited take-up of the fintech products offered during the pilot’s implementation, which suggests two possibilities: (1) nonprofits and the financial education field may need to go even deeper to understand and address the practical and behavioral barriers that clients face in accessing fintech, and (2) fintech providers may need to rethink product design to tailor it to the unique needs of users with low incomes, informing this work with the input and insights from nonprofits like those who participated in the pilot.
This brief presents lessons learned during the planning and implementation phases of the pilot program in four Chicago-based nonprofit organizations.
Planning Phase Findings
The participating nonprofits brought mixed levels of experience with fintech to the pilot. This was the first time two of the nonprofits had formally incorporated fintech into their financial coaching services. A few products came with technical support, and a few presented challenges. Coach training was consistent across products. However, coach buy-in varied, which may have dampened coach motivation to introduce fintech products to clients.
Implementation Phase Findings
We observed that client interaction with the fintech products typically involved four stages: product introduction, access, registration, and utilization. Important lessons emerged from the multistage implementation phase.
- Methods for tracking distribution varied. In some instances, coaches relied on less formal client self-reporting on their take-up of an introduced product; in others, coaches requested more systematic feedback from clients.
- The number of clients introduced to a product varied across the nonprofits. All nonprofits used one-on-one coaching sessions with clients as the primary way to introduce products to people with a demonstrated need for them. Some nonprofits also used workshops, webinars, social media, and other forms of marketing to introduce products to groups more broadly.
- Some clients encountered barriers to access. A few clients said that lack of access to a smartphone or a computer was a roadblock to fintech products. Spanish language accessibility was another.
- Client utilization of the fintech products was low overall. At the end of the implementation phase, 274 clients had been introduced to a fintech product, but only 5 had actively used it.
- Most nonprofit staff gained valuable experience distributing fintech. Most nonprofit staff—at both the management and line staff levels—said that participating in the pilot brought valuable insights.
- Trust was a key factor in distribution. Coaches highlighted the importance of the trusting relationships they built with clients. They had fears around losing trust if a fintech product did not perform the way they expected, possibly even hurting a client’s finances. Clients themselves expressed concerns about fintech products that requested sensitive information.
Highlights of Recommendations for Nonprofits
- Ensure coach buy-in. Coaches who used a fintech product themselves felt more comfortable sharing information about the product with clients based on their firsthand experience.
- Provide multiple fintech options. Some coaches prefer having a suite of product options to accommodate differences in client needs.
- Support clients over several counseling sessions. Besides not seeing a need for the product, simply not getting around to using it was the most prevalent reason for not accessing it.
Highlights of Recommendations for Fintech Developers
- Develop fintech in other languages. Spanish-speaking clients and the nonprofit staff who work with them frequently cited product language as the tallest hurdle.
- Make identification requirements more flexible. Asking for sensitive personal information is a concern for some would-be consumers.
Highlights of Recommendations for Funders
- Gather more knowledge about fintech use among clients with lower incomes. Use surveys and focus groups to dig deeper into the what, how, and why of preexisting fintech use by demographic group.
- Conduct other fintech distribution pilots to build on lessons learned. Introduce a range of products to clients, rather than a single one at each nonprofit, and use more systematic methods for tracking data.
- Support more research and other efforts to build and spread best practices for distributing fintech to clients with low incomes.