Big Banking + Silicon Valley: The Dream Team That Can Improve Cash Flow?

Big Banking + Silicon Valley: The Dream Team That Can Improve Cash Flow?
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Why you should care

Because everyone deserves a healthy bank financial life.

Most of us have probably experienced money issues at some point; paychecks that run dry long before the next one is due, the sinking feeling in your stomach at the cost of unexpected car repairs or the uncomfortable choice between the electric bill and groceries. If you can relate, you’re far from alone. In fact, according to research by the nonprofit Center for Financial Services Innovation (CFSI), 57 percent of Americans — 138 million people — struggle with financial health.

According to the Federal Reserve, 46 percent of U.S. adults say they could not cover a $400 emergency expense.

“Half of Americans have too much debt, irregular income or a lack of savings. Which means when they have an unexpected emergency, they’re not able to bounce back from that,” explains Colleen Briggs, executive director of community innovation at JPMorgan Chase. “That causes significant stress and uncertainty. Also, it makes it really hard to meet your long-term goals like starting a business, buying a home or saving for retirement.”

Although poor financial health affects all socioeconomic groups, it disproportionately affects underserved communities — including people of color, individuals with disabilities, low-income women and seniors — at rates greater than the overall population. Research from CFSI and others shows that many in these communities earn lower income altogether and experience more financial ups and downs as their income varies from month-to-month. This makes it harder to save — and makes people more susceptible to short-term financial solutions, like payday loans, at the expense of long-term wealth. As a result, the financially vulnerable are more likely to be evicted or rely on public assistance, which in turn has costs to the broader community. Adds Briggs, “You can’t have inclusive growth without thinking about the financial health and resiliency of individuals and their families.”

There is a lot of critical knowledge that isn’t easily found on Google.

Alex Marlantes, founder of Everlance, 2016 JPMorgan Chase Financial Lab winner

These are some of the kinds of problems that the Financial Solutions Lab hopes to address. A joint project of CFSI, which manages the program, and JPMorgan Chase, the lab’s founding partner, its purpose is to support technology-led solutions to help everyday people — with a focus this year on underserved communities — improve their financial health. “What’s exciting,” says Briggs, “is that technology is really reinventing the way that we can do this.” Drawing on JPMorgan Chase’s and CFSI’s deep well of expertise and relationships in the financial sector, she says the aim of the Lab is to provide a customized set of resources for Lab winners, including support from behavioral economists, design thinking leaders, law firms and Silicon Valley, to improve their products and expand their reach.

That expertise and access to advice was invaluable for Alex Marlantes, whose Everlance startup was a 2016 Lab winner. “There is a lot of critical knowledge that isn’t easily found on Google,” he says. “It really helps to talk to the people who are experts in this space.” Marlantes says the Lab helped his team hone in on the right direction for Everlance, an expense-tracking app that helps independent workers avoid the end-of-year tax shock that so often comes with freelance work. “[The Lab] is really focused around how to navigate what I think is a very challenging, nuanced and complex landscape for financial regulations,” he says. “And also how to build a business that keeps in mind this constituency, which is the financially underserved.”

Another 2016 Lab winner is the San Francisco–based nonprofit Earn, which for the last 15 years has been helping low-income households with financial empowerment and savings. Chief Executive Leigh Phillips says shortly before joining the Lab, Earn launched its first tech-based savings program, Starter Savings, which helps families save their first $500. And like Everlance, the mentorship and access to resources provided by the Lab have been a big help to EARN — in part contributing to its success at expanding its reach to 6,000 new savers in all 50 states. “Programs … like the Lab are really trying to respond to how people actually live,” says Phillips, “and to how they actually manage their finances, instead of trying to fit people into a system that wasn’t designed for them.”