User login

Filene Looks for Credit Unions to Be Part of 18-Month Pilot Program

The Filene Research Institute is launching an accessible financial services incubator. Filene Research Institute received a $700,000, 30-month grant from the Ford Foundation to develop and implement an accessible financial services incubator. The incubator will test, package and scale innovative, viable financial products that benefit low-and-moderate-income US consumers.

Filene will select 25 U.S. credit unions and five products for an 18-month pilot program that will begin in November 2013. Credit unions interested in testing potential incubator products and organizations with potential product innovations for the incubator can learn more and apply here.

This grant comes as one in five households, or 24 million American homes, are underbanked and lack access to affordable financial services. The socioeconomic disparity is compounded by the racial and ethnic disparities among persons denied credit; 53 percent of African-Americans, 43 percent of Hispanics and 44 percent of Native Americans are underbanked.

“Mainstream financial institutions consistently fail to improve access for these vulnerable persons to affordable credit and other essential financial products,” says Mark Meyer, CEO of Filene. “Consequently, alternative financial services providers have ample opportunity to exploit underbanked individuals.”

“The Ford Foundation’s support enables us to build an accessible financial services incubator that provides alternatives to payday lenders and other predatory providers in America’s low-and-moderate-income communities,” says Meyer. “The incubator will contribute significantly to creating a vibrant financial marketplace that offers products beneficial for underbanked consumers and mainstream financial institutions.”

Filene will test, package and deliver viable financial products through the incubator’s three discrete phases:

  • The lab – testing promising product ideas
  • The factory – manufacturing innovations and packaging products for mass adoption
  • The marketplace – distributing products through in-person and open-source online marketing

The incubator will use credit unions as the proving ground for innovative products to test their viability with mainstream financial institutions. An advisory panel of financial institution staff, researchers and industry analysts will ensure the viability of the selection, testing and marketing of the incubator’s product ideas.

“There is a gap in the availability of fair and affordable financial products that meet the transaction, savings and credit needs of low- and moderate-income families and are also profitable for financial institutions,” says Amy Brown, program officer, financial assets, at the Ford Foundation. “The accessible financial services incubator holds the promise of identifying products that fill that gap and bringing them to scale in the marketplace.”

Filene will host the incubator at its headquarters in Madison, Wis. While this is the organization’s first Ford Foundation grant, Filene received a sub-grant from the D2D Fund supported by the Ford Foundation in 2008 to plan and implement Prized Link Savings products to eight credit unions. Within 11 months, 11,500 consumers saved an estimated $8.5 million.