Over 100 million American households experienced a financial shock in the past year – a medical expense, interruption in income, a car repair. This type of shock will cost an average of $2,000, and fewer than six out of ten households have enough liquid savings to pay for an expense of this magnitude. A majority of those experiencing financial shocks reported that the shock made it hard for them to make ends meet.1 Without products to help households weather financial shocks, the effects reverberate throughout a family’s finances, often causing long-term damage.
This challenge was at the center of the second annual competition of the Financial Solutions Lab. The Lab is a $30 million, five-year initiative managed by the Center for Financial Services Innovation (CFSI) with founding partner JPMorgan Chase & Co. From late February to early April 2016, FinLab accepted applications from financial technology, or fintech companies and nonprofits with solutions that solve or attempt to solve the challenges created by the financial shocks that most American’s face.
356 organizations responded to the call for applications, 19% more than in 2015. Collectively, these applicants serve 4.2 million Americans, have raised over $420 million in external capital, and employ 2,293 people. Taken as a whole, this group provides a unique window into the state of consumer-focused financial technology in the United States and allows us to make a number of observations about the state of innovation in the space and about where the industry is headed.