Despite a strong economy and low unemployment, the U.S. Financial Health Pulse shows more than half of Americans are struggling to pay their bills, save and remain financially stable. The problem is most acute for low-income individuals. Five years ago, the Financial Health Network launched the Financial Solutions Lab (FinLab) in partnership with JPMorgan Chase to catalyze the development of innovative, technology-enabled strategies, products and services that improve financial health in America. As we kicked off year five, we engaged the Initiative for a Competitive Inner City (ICIC) to take a holistic look at the impact the FinLab has had to date scaling innovative consumer financial health fintech companies and moving the needle on consumer financial health.
FinLab: An Innovative Model for Supporting Fintech Companies
Financial Health Network and JPMorgan Chase intentionally designed FinLab to focus on supporting a small number of innovators (less than 10 per year) that exhibit high potential for disrupting the way that consumers access financial services. As a result, FinLab takes a high-touch approach, tailoring its support for each company. In addition, each company received up to $250,000 in capital, access to mentoring through JPMorgan Chase, connections to a network of industry partners, and access to regulators through curated meetings. By providing innovators with capital, reputational investment and technical assistance, FinLab de-risks promising early stage innovations and helps create a path to scale.
Key Takeaways and Successes
1. FinLab is driving innovation to improve consumer financial health by inspiring new entrepreneurs in this space. FinLab creates visible pathways for entrepreneurs interested in using technology to improve the financial health of consumers.
2. FinLab cohort companies have been successful in scaling and accessing capital. In total, FinLab alumni have created 185 new jobs and have over 4 million customers to date, of which over half are low-to moderate income. They have raised over $500 million in follow-on capital since joining the Lab, including $184 million in equity.
3. FinLab participants overwhelmingly reported that FinLab helped them grow their business. They gave high ratings for FinLab’s effectiveness in increasing their knowledge of consumer financial health, their business management skills and making introductions to new customers and suppliers in the U.S.
4. Individual consumer impact metrics show that FinLab cohort companies are beginning to move the needle on consumer financial health. One company reported a median credit score improvement of 80 points over a one-year period for its users and another reported a savings rate of six percent to 10 percent, which exceeds the national average.
5. A key FinLab impact has been strengthening and expanding the fintech ecosystem, thereby indirectly supporting the growth of many more fintech companies. FinLab has helped increase interest in consumer financial health fintech among incumbents and investors and has helped foster dialogue between regulators, consumer advocates and entrepreneurs.
The first five years of FinLab have been a success in supporting nearly 40 early stage startup companies focused on financial health reach more than 4.5 million customers with their solutions. Overall, consumers have saved more than $1 billion using FinLab products, thousands more have improved their credit scores, and others are taking steps to build a stronger financial future.
Read the full report: Scaling Solutions for A Financially Healthy America: An Evaluation of the Financial Solutions Lab. To learn more about the innovative teams that have been disrupting the industry and FinLab’s impact on strengthening the broader consumer financial health ecosystem, visit http://finlab.finhealthnetwork.com/. You can also sign up for the Innovation newsletter bit.ly/FinLabBlog, or follow FinLab on Twitter @TheFinLab.