Just Announced: Four Products Enter Accessible Financial Services Incubator
We searched nationwide for products to test in our new accessible financial services incubator, funded by a grant from the Ford Foundation. These products had to be innovative in ways that benefit low-and-moderate-income consumers. The four products we selected from more than 20 submissions show promise of doing just that.
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.
- Borrow and Save by the National Federation of Community Development Credit Unions. This product increases consumers’ economic security 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.
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.