That fits the bill with the concept of prize-linked savings. More than ten years ago, Filene Research Fellow Peter Tufano produced findings from around the world showing lottery-based savings programs make saving more fun and engaging, and inspired more people to save. That was back in 2006.
After sharing these insights with Filene’s i3 community, one team took a closer look at the idea. A group of savvy, innovative and passionate credit union boundary-pushers, armed with this research, shook out an idea that in all likelihood, didn’t stand a chance of becoming a game changer. There were, at the time, significant barriers in the form of state laws that prevented the use of a concept like prize-linked savings in the U.S.
With a perfect storm of the right conditions – promising research, powerful connections, determined think-and-doers, and a giant heaping of collaboration, this credit union team morphed, tweaked, noodled on, and reshaped the idea to make it work. It had entered ‘the game-changer zone.’
Finding a small wrinkle in Michigan law allowing credit unions to offer prize-linked savings accounts, Professor Tufano’s nonprofit, Filene and the i3 team, and the Michigan Credit Union League launched the Save to Win pilot* in 2008. Since then, the program has engaged over 60,000 credit union members who have saved over $140 million. More than 75% of Save to Win accountholders are financially vulnerable and nearly 90% retain the account year over year. Many credit the opportunity to win as the main catalyst for saving the first time. Boom – game changer status achieved.
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*record scratch*
*freeze frame*
Yep, that’s me. You’re probably wondering how I got into this situation.
Fast forward to 2017
Legislation that previously would have put a barrier to prize-linked savings programs has now been removed from 24 states, allowing credit unions to strengthen the financial well-being on their members through this research-proven and tested approach.
Wisconsin is not one of those states. Yet. So here I am—testifying in front of the Wisconsin State Committee on Financial Institutions (and later a similar state Senate Committee) to amend Wisconsin Law to allow state chartered financial institutions to conduct savings promotion prize programs.
Because of the work, started more than 10 years ago, of this amazing credit union i3 community, I was able to tell the committee with confidence that a new prize-linked savings product has the potential to improve customers’ relationships with their existing financial institution, and attract first-time savers to new institutions. Also, that this type of product has the potential to positively impact our communities and that savings generated through prize-linked savings products are frequently used to cover financial emergencies, such as unexpected medical costs, often lessening the use of high-cost debt. I’m looking forward to seeing what kind of game changer this can be for people in Wisconsin.
Shake it out, Test it up
We think we’re a pretty smart, hard-working and passionate group at Filene. But we can’t do what we do without credit unions – both the individuals with the game-changing ideas to shake out, and the institutions that believe in the power of those ideas and work hard to bring needed solutions to their communities.
It’s exciting to think what the next thing we’ll be testifying for, or experimenting with, or building, or pushing or knocking over with the seed ideas that come from credit union heads and hearts. What will be the start of the next big change? Is it in your head right now?
We invite you to shake it out with us through Filene i3, or to join us in the incubation space – our vital idea-testing phase.
Debt Dragon and Bank on Family are two top ideas that have been shaken out by others. Credit unions share a common mission with us – to create solutions to improve the financial wellbeing of consumers and affect greater economic independence. We believe that within these concepts, and the ideas still dormant in your heads, are all the answers we seek.
*Debt Dragon and Bank on Family are our latest i3 pilots. Join our testing family and change the game. Or, let us know you want to stay informed on what concepts get tested next.