Giving Compass' Take:

• The authors at Urban Institute present lessons learned during the planning and implementation phases of fintech pilot programs in four Chicago-based nonprofit organizations.

• How can donors help spread awareness about the impact of fintech? 

• Here's what we've learned from 1,000 fintech companies over the past years. 

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.

Read the full article about leveraging financial health by Mary Bogle, Kassie Scott, Jorge González, Brett Theodos at Urban Institute.