The Financial Solutions Lab, an initiative from the Financial Health Network in collaboration with JPMorgan Chase and Prudential Financial, announced its eighth Accelerator Challenge. The Accelerator seeks applications from financial technology companies focused on helping low- to moderate-income (LMI) and Black and Latinx communities expand access to benefits and financial tools that help them to maintain key safety nets and improve their financial health.
Almost two years into the pandemic, US consumer financial safety nets continue to be challenged.
- US households with annual incomes less than $30k are more than twice as likely to be financially unhealthy than higher-income households, leaving many families behind on paying bills such as rent and mortgage payments, prioritising immediate financial needs over planning for the future.
- While public supports such as stimulus payments and child tax credits have had a positive immediate impact on LMI and Black and Latinx communities’ liquidity, systemic barriers continue to prevent these communities from building and maintaining long-term financial health.
The economic impacts of the pandemic have taken a higher toll on communities of colour, particularly Black and Latinx communities, who face depleted emergency savings, experienced the greatest job losses in frontline jobs, are managing rising healthcare costs, and have limited access to workplace retirement savings plans. For example:
- Low-income Black and Latinx families and women of colour experienced the fastest depletion of their cash balances gained during covid.
- Black Americans seeking unemployment benefits are approved 73% of the time compared to 80% for White Americans.
- 52% of Black and 68% of Latinx Americans do not currently have access to a workplace retirement plan versus just 40% for White Americans.
This year’s Accelerator will be focused on addressing these gaps and identifying innovative solutions helping LMI and Black and Latinx communities to better navigate and benefit from the existing web of financial health benefits, products, and tools.
“Too often, accessing benefits requires consumers to navigate complex systems and option sets, many with opaque terms, extensive requirements, and limited accessibility,” said Hannah Calhoon, vice president, Innovation, Financial Health Network. “There is a great need and potential for innovative solutions improving user experiences that make financial health benefits and tools more accessible.”
Solutions relevant for this year’s Accelerator cohort include, but are not limited to:
- Optimisation of public and private benefit experiences and tax system navigation.
- Enhanced enterprise and consumer applications to manage healthcare costs and decisions.
- Affordable services to help address obligations within the legal system.
- Stronger resources and safety nets to protect against income volatility and economic shocks.
- Improved access to retirement preparation and navigation tools.
The program will prioritise founders and teams with first-hand experience of the issues they are addressing, and companies demonstrating a commitment to operationalising Diversity, Equity, and Inclusion principles within their organisation. Pre-seed and seed-stage startups are encouraged to apply.
“Fintech innovation has the potential to support consumers navigating complex financial and social systems that help build financial health, especially for those who have suffered most during the pandemic – Black and Latinx communities,” said Sarah Willis Ertur, director of Financial Health, JPMorgan Chase. “These solutions align to the goals of JPMorgan Chase’s $30billion racial equity commitment, working to tackle major barriers to wealth creation and an inclusive recovery.”
Each selected organisation will receive up to $100,000 from the Financial Health Network; product and user behavioural insights to help inform development and market strategy; guidance to navigate the legal and regulatory fintech environment; insights on impact and customer financial health measurement; resources for external marketing and communications; mentorship from financial services and financial health experts; support to further diversity, equity, and inclusion; and more.
“With nearly half of Americans struggling with financial hardship resulting from the pandemic, we need to do more to ensure equal access to financial tools and systems, especially for the most vulnerable,” said Sarah Keh, vice president, Prudential Inclusive Solutions. “There is a tremendous opportunity for innovative solutions to help fill the gaps in our social safety net and give people the flexibility they need to continue to build financial health.”