Chicago, IL – (June 3, 2014) – Today, the Financial Health Network announced the creation of the Small-Dollar Credit Test & Learn Working Group. Five leading financial services providers—Regions Bank, LexisNexis Risk Solutions, Kinecta Federal Credit Union, Enova International and Emerge Financial Wellness—are piloting small-dollar credit products or product features that put into practice many of the recommendations from the Financial Health Network’s Compass Guide to Small-Dollar Credit. The Compass Guide establishes clear standards of quality for small-dollar credit products. Through the Test & Learn Working Group, the Financial Health Network will work with participating companies to evaluate the pilots, in order to better understand what works and to encourage replication of successful approaches that promise to improve the financial outcomes for millions of borrowers.
“These pilot projects are an important step in driving high-quality innovation in a market that needs it,” said Jennifer Tescher, President & CEO, the Financial Health Network. “Credit can help consumers weather a financial shock, build credit, or smooth income fluctuations, and we believe the industry can meet these needs with products that provide positive outcomes for providers and consumers.”
The Working Group is funded by the MetLife Foundation, the Ford Foundation, and the Omidyar Network.
“We believe that supporting initiatives like the Test & Learn Working Group will offer critical insights into aspects of financial inclusion that will enhance programs and advance our common goals,” said Dennis White, President and CEO of MetLife Foundation. “We know that providing access to quality, affordable products and services for low-income individuals and families is important, but it is equally important to ensure that these programs advance research and deepen knowledge in this area.”
This announcement coincides with the release of the Financial Health Network’s latest research on small-dollar credit consumers, “Design Matters: Learning from Consumers’ Experiences with Small-Dollar Loans.” This analysis of qualitative data focuses on borrowers’ experiences with loan structures, repayment policies, customer service and opportunities for economic mobility.
The results highlight demand for a new generation of products, underscoring the importance of the Working Group’s efforts to identify and test products that align provider and customer success.
The members of the Working Group are:
- Regions Bank is piloting changes to its existing savings-secured installment loan that enable customers to borrow with as little as $250 in savings.
- Kinecta Federal Credit Union will begin piloting, in mid-June, a payday consolidation loan that will allow customers to convert multiple outstanding payday loans into a single installment loan. LexisNexis Risk Solutions is offering its RiskView score to underwrite this loan.
- Enova International is piloting a new feature that allows customers of its online NetCredit Gold product to customize their loan terms and monthly payment amounts.
- Emerge Financial Wellness is piloting ways to increase take-up and usage of an optional “Save as You Repay” feature, which allows borrowers of its workplace-based installment loan product to contribute additional funds to a savings account each time they make a payment.