How FinTech has helped consumers save thousands during the pandemic

Consumer Action launched two financial health and technology programs in 2020 with support from Wells Fargo and JPMorgan Chase. The programs included mini-grants for 13 community-based partners across the country to provide financial coaching or counseling, distribute Consumer Action’s financial technology (FinTech) guide, measure financial health, and distribute FinTech applications to individual users for real-world evaluation. All told, Consumer Action helped 352 consumers and nonprofit staffers save nearly $515,000 within a five-month period during the pandemic through the use of FinTech (financial technology) apps and online platforms.

The mini-grantees included Birmingham Urban League; Bon Secours Community Works of Baltimore; Catholic Charities Dallas; Delhi Center of Santa Ana (California); Easter Seals of Greater Houston; Northern Virginia’s Homestretch; Housing and Family Services of Greater New York; Houston Area Urban League; Washington, D.C.’s Latino Economic Development Center; Louisville Urban League; Philadelphia Chinatown Development Corporation; and Urban League of Metropolitan Seattle.

The savings occurred as part of two FinTech distribution programs that Consumer Action conducted with participants between March and December 2020, using a number of leading FinTech providers, including Albert, Digit, Esusu, SaverLife and Self.

“We hope to do more in 2021 to continue our FinTech work and help consumers—including those less fortunate, such as communities of color and other underrepresented consumers who are living through the harshest realities of the pandemic,” said Consumer Action’s director of strategic partnerships, Audrey Perrott.

“Many people did not have buffers, such as emergency savings, to weather the financial storm that resulted from the pandemic, leaving consumers that were already financially vulnerable exposed to additional hardships, such as food insecurity, utility shut-offs, evictions and foreclosure,” Perrott added. “FinTech is critical to helping these populations build or replenish savings, build or maintain credit, and essentially reboot their financial lives.”

By the numbers

Consumer Action helped 321 consumers use a FinTech tool to create a budget. Tools included Albert’s Genius (a personalized, interactive online financial planning and accounting tool), EveryDollar (a monthly budgeting tool) and Mint (a customized money management/tracking service by Intuit).

Consumer Action helped over 200 consumers improve their credit. The online tools used to monitor credit scores included CreditWise’s free credit monitoring service, Esusu’s savings and credit building platform, and Self’s credit building accounts. Consumers using Esusu saw an average increase in their credit scores of 27 points, while the average increase for consumers using the other tools was 43 points.

Other consumers used: Fresh EBT to manage their EBT (food stamp) benefits online; estate planning app Tomorrow to create a free will; and WiseWage to obtain a fee-free FDIC-insured bank account. As consumers developed confidence in using the technology, many also began to use online banking apps and other non-project-related FinTech tools.

Consumer Action trained 1,121 community-based organization and community college staff members, consumers, entrepreneurs from underrepresented communities, students, and other stakeholders on financial health measurement, technology and inclusion at a series of in-person and virtual events.

Other Consumer Action FinTech program activities included updating our fintech guide and translating it into Spanish, Chinese, Vietnamese and Korean; developing FinTech educational videos based on the guide in three languages; and tracking the outcomes of those consumers who used the provided FinTech tools over a six-month period.

Making FinTech count for every consumer

FinTech program participants were selected from Consumer Action affiliates’ client programs (which provide credit, housing/transitional housing and/or workforce development counseling, financial coaching, disability and assistive technology services, immigrant services and more). All of the participating agencies serve low-to-moderate-income consumers who are also “income vulnerable” (defined as being at greater risk of falling into poverty or experiencing a greater level of poverty).

Consumer Action used a human-centered approach to select a suite of FinTech apps/tools for the participants at each site, based on the common financial needs identified by the participants. Each participating affiliate distributed the apps or tools to its clients and staff, collected survey data using the Financial Health Network’s FinHealth Score® Toolkit Survey and collected the resulting savings and credit data.

As a member of the Financial Solutions Lab Exchange (a marketplace for nonprofit and FinTech providers to collaborate and build high-impact partnerships), Consumer Action has gained from the opportunity to learn and share best practices for measuring financial health and deploying FinTech solutions to help consumers improve their financial capability.

FinTech can allow consumers to perform financial management tasks quickly using a smartphone, tablet or computer. However, consumers must exercise care, review user agreements, develop strong passwords and review privacy policies. Visit our newest project on how to Share Financial Data with Care here.

If you are interested in supporting our FinTech innovation work and financial capability programs, please contact Consumer Action’s executive director, Ken McEldowney, at [email protected], or Audrey Perrott at [email protected].