More than Money: Changing Financial Services One Startup at a Time
This week, the Financial Solutions Lab – managed by the Center for Financial Services Innovation (CFSI) with founding partner JPMorgan Chase & Co. – announced its latest challenge for fintech startups and nonprofits. Winning organizations will get a $250,000 investment, plus access to all kinds of other resources. For those who aren’t familiar, the Financial Solutions Lab exists to help early stage fintech innovators build and scale high-quality products that can improve Americans’ financial health.
The Lab also released an Impact Report on its first three years, Powering the Next Generation of FinTech to Improve Consumer Financial Health. To create it, our team performed vast surveys of Lab participants past and present, and also looked into our applicant pool more deeply to see what we could learn.
Over my last three years with the Lab as head of communications for CFSI, I’ve provided communications and marketing advice to 26 startups both during and after their time in the program – here are some takeaways from the experience.
It’s actually not about the money
While the $250,000 investment in each selected company is enough to ensure that firms can operate throughout our 8-month program (funded via a grant from JPMorgan Chase), it’s clearly not the only reason we’ve seen more than 1,000 applicants to this program to date. Much of the deeper value to applicants comes via the mechanisms – both formal and informal – offered by both CFSI’s Network and JPMorgan Chase, that are designed to reduce the financial services learning curve, and to facilitate important business relationships. In fintech in particular, founders are often mystified by the seemingly archaic, layered regulation and compliance requirements that appear to stand in the way of innovation – things like money transfer regulations written in the days before the internet. It is in this space where the Financial Solutions Lab can be truly catalytic.
One example of this is a company called Propel. Jimmy Chen, a former Facebook product manager, decided he wanted to do something to fix bureaucracy, so he moved from Silicon Valley to New York and created an app (pictured above) designed to help people sign up for SNAP (formerly known as food stamp) benefits. His team quickly realized that while application and recertification was a problem, managing SNAP balances was a big pain point as well. Through the Lab, Chen was able to connect with JPMorgan Chase executives who formerly administered state Electronic Benefits Transfer (EBT) card programs. This connection enabled him to pivot to offering SNAP recipients an easy way to check balances and manage their grocery spend. Today his FreshEBT app is used by more than 1 million Americans each month. And while it’s true that Chen might have been initially attracted to the Lab for financial reasons, that’s the least of what he got out of it. Because of FreshEBT, a million Americans are experiencing one fewer “hungry days” per month (measured as days when someone’s SNAP balance is below $5) – and this is thanks largely to critical connections offered by the Lab.
More startups are innovating with purpose
These days, more and more people are seeking jobs with meaning – millennials in particular. As a New York Times opinion piece put it, “Rather than chasing the money, they appear to want a career that makes them happy — a job that combines the perks of Google with the flexibility of a startup.” Think about it: If you’re a gifted product manager or coder and you could do any work you choose, wouldn’t you seek a job or create a product that serves a higher purpose?
We see that in our applicant pool: Solutions like EverSafe solve the very real problem of elder financial fraud, which puts 70 percent of Americans’ wealth at risk every year; Digit’s founder firmly believes in the power of a savings cushion, so it’s helping people save in an automated way; the founders of Nova Credit are helping immigrants bring their credit histories with them to the United States, so they can struggle less and contribute more. All of these solutions are solving real problems for real people – often problems experienced by the startup founders themselves – and the Lab, CFSI’s Network, and JPMorgan Chase have all provided significant support as these founders create and refine solutions with purpose.
There is so much work to do
I’m encouraged by the degree to which many organizations are pushing for greater diversity, and saddened that in 2018 we still have such a long way to go. Given the breadth of Americans who are struggling with financial health, it seems especially important that innovative products are available that will resonate with broad and diverse populations.
So how can we get to the place where there are innovations working for people who need them the most, created by people who identify with the problem they’re solving? It starts with spotlighting areas where we think the industry is lagging. This year we identified some of those by name in our Lab announcement – namely products developed by entrepreneurs of color, women, and people with disabilities, and solutions designed to meet the financial needs of overlooked populations.
It’s tough to come out of the gate and say that we want to see more founders from diverse backgrounds, serving diverse audiences – knowing that what we want to see, and what exists, may be two different things. But if we keep shining a light on that lack of diversity, there will come a day when there’s an ever-larger pool of innovators rising up – people who know this problem from personal experience, and who are determined and ready to solve it.
This year’s challenge is now open for early stage startups and nonprofits, and we can’t wait to see all the great work being done out there to make financial health a reality for more Americans. We hope our applicants will reflect a greater diversity of solutions, of customer focus, and of founding teams than ever before. If they do, the selected Lab companies aren’t the only ones who win. We all do.
Top/homepage image: An app developed by Propel to help low-income people manage their SNAP accounts. (Photo by Propel)