MADISON, Wis. (8/29/13)--Filene Research Institute has received a $700,000 grant with a 30-month duration from the Ford Foundation to develop and implement an accessible financial services incubator. It will test, package and scale innovative, viable financial products that benefit low-and-moderate-income U.S. consumers.
"Every American has the right to hopes, dreams, wants and a better way of life," Mark Meyer, Filene CEO, told News Now. "The alternative financial services sector's providers have ample opportunity to exploit underbanked individuals today, blocking that right. With the Ford Foundation, we want to bring to the market consumer-friendly financial products that help them achieve their fullest potential and live the lives they want."
Filene will select 25 U.S. credit unions and five products for an 18-month pilot, beginning in November. Credit unions interested in testing potential incubator products and organizations with potential product innovations for the incubator can learn more and apply by using the link.
The 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% of African-Americans, 43% of Hispanics and 44% of Native Americans are underbanked, said Filene.
"Mainstream financial institutions consistently fail to improve access for these vulnerable persons to affordable credit and other essential financial products," Meyer said.
"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," Meyer added. "The incubator will contribute significantly to creating a vibrant financial marketplace that offers products beneficial for underbanked consumers and mainstream financial institutions."
The project will have three phases:
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 product ideas.
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 prize-linked savings products to eight credit unions. Within 11 months, 11,500 consumers saved an estimated $8.5 million.