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Digital Backup: Fintech Solutions to Support America’s Most Vulnerable

Monday, May 11, 2020

By Garry Reeder

More than 33 million Americans have filed for unemployment since March – a new record. Yet even during the economic expansion of the last decade, the U.S. Financial Health Pulse shows that only 29% of Americans are considered financially healthy. A recent Federal Reserve study finds that nearly 40% of Americans would struggle to come up with $400 in a pinch. Tens of millions of people lack the savings to fall back on if they are laid off or miss work because of illness, childcare needs, school closures, or because their employer has cut their hours. Hourly workers, gig workers, and students – especially those considered low- to moderate-income (LMI) – were some of the first to experience reduced income and unemployment as stay-at-home orders were enacted across the country.

For Supplemental Nutrition Assistance Program (SNAP) recipients and others whose financial health was already precarious, the impact of COVID-related layoffs, work reductions and benefits loss was almost immediate. Financial Solutions Lab portfolio company Propel found that 86% of the working SNAP recipients who use its Fresh EBT app have lost significant income since the onset of the COVID-19 crisis.

In a recent Forbes piece, Financial Health Network CEO Jennifer Tescher discussed the upward trends in financial app adoption and how, rather than a measure of success, this trend instead reveals a striking digital divide. With access to COVID-19 aid, information, and support dispersed through technology that millions of Americans lack, financial disparities continue to widen across the country.

Fintechs Addressing COVID-19 Challenges

Many fintechs have been focused on helping consumers build emergency savings accounts; have developed agile and expedient solutions to deliver financial coaching, help users manage money, or build customer savings; and may already be familiar and working with vulnerable populations.

These Financial Solutions Lab portfolio companies are already helping users optimize financial health during these challenging times:

  • Propel’s Fresh EBT app helps more than 2 million SNAP recipients instantly check their EBT and food stamp transaction history and current balance, budget and manage their benefits, and find deals and savings. To help those most in need, Propel is working with partners to deliver $1,000 (per household) in cash to its users, limited only by what they can fundraise.
  • SaverLife and Neighborhood Trust Financial Partners have teamed up to help disperse $2.5 million in financial aid to vulnerable entrepreneurs and their employees who have been financially affected by COVID-19. The program will leverage SaverLife technology and TrustPlus financial coaching (Neighborhood Trust’s worker benefit, providing phone-based financial coaching and digital tools) to connect to small business owners and their employees who are experiencing loss of income. The program will provide a $500 emergency savings fund boost directly to individuals through digital channels as well as access to financial crisis coaching and a post-crisis savings fund to help rebuild depleted accounts.
  • HoneyBee’s platform provides employees with on-demand financial experts and no-cost funds to help them manage bills and unexpected expenses. In response to COVID-19, HoneyBee is covering the cost of the first three months for all employers so they can give employees the peace of mind they need during this uncertain time.
  • Even provides consumers with early wage access, helping them avoid overdrafts and other high-cost credit alternatives. Even is helping employers provide employees with faster access to their paychecks and to planning tools that build financial resilience. The company is also waiving all membership fees for employees for two months and enacting a simplified contracting process to help more workers sooner.

Learn more about some of the unique solutions, offerings, and partnerships being unveiled by Financial Health Network Members (including Financial Solutions Lab portfolio companies) to help consumers through these challenging times.

VISIT OUR COVID-19 RESOURCE HUB

Fintechs Partnering with Nonprofits

Consumers struggling with the financial challenges presented by COVID-19 may be turning to local nonprofits for financial coaching, food/essential services, or other forms of support. Nonprofits are typically anchors in their local communities, helping to enrich the lives of neighborhood residents. To provide services to more people in a more efficient way, nonprofits should consider collaborating with fintechs. These collaborations can help nonprofits provide well-designed tech to those they serve.

These partnerships have become more important than ever during the current crisis, as they help nonprofits and fintechs expand their reach and efficiency in providing economic relief, giving consumers a stronger lifeline to improved financial health.

The Financial Solutions Lab’s Nonprofit-Fintech Exchange is accepting applications for its 2020 grant program focused on worker and student financial health – especially for nonprofit-fintech partnerships that will tackle challenges stemming from COVID-19. Grant recipients will receive $50,000 in capital for each partnership, technical assistance to execute projects, the chance to engage and learn from peers, and more.

LEARN MORE ABOUT THE GRANT PROGRAM

Stay connected with the Financial Solutions Lab for updates on our response to COVID-19, the Nonprofit-Fintech Exchange grant program, our next Financial Solutions Lab Accelerator cohort, and other program happenings.

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