Financial Solutions Lab announces Year-Two challenge

The statistics showing the percentage of Americans living paycheck to paycheck are numerous, and all are dire. Should a significant unexpected expense occur many would not be prepared.

A recent Pew Charitable Trusts study showed 60 percent of Americans suffered a financial shock over the past year. If that shock carried a $2,000 tab, only 60 percent had enough liquidity to pay it in full.

Those numbers are confirmed by a JPMorgan Chase Institute study which estimated there was an $1,800 gap (the wrong way) between the amount of money the typical middle-class household needs to sustain monthly income and spending fluctuations and what they have.

That is why Financial Solutions Lab, for Year Two of its $30 million, five-year initiative, chose financial shocks as the problem they want fin-tech innovators to address. Between today and April 7, fin-tech entrepreneurs can submit an application to the company’s website.

Those applications will be reviewed by a group of strategic partners with backgrounds in behavioral economics, community outreach, for-profit entrepreneurship and human-centered design. Finalists will pitch their solution to a panel at EMERGE Forum 2016 in New Orleans in mid-June.

Financial Solutions Lab Director Ryan Falvey said everyone involved in the program learned plenty about technology’s ability to solve problems in Year One, where entrepreneurs addressed the lack of household liquidity. They are ready to adopt a larger scope in Year Two.

Ryan Falvey FinLab

Director Ryan Falvey

“We learned even if you create some (financial) space, in the United States you see that cushion wiped out too often,” Mr. Falvey said. “Unexpected expenses or drops in income will set many behind.”

“Many larger consumer purchases¬†can be anticipated,” he continued. “For example, cars break down eventually. Can we help anticipate that?”

Mr. Falvey said in the coming years the program will encourage entrepreneurs to think about longer term issues like insurance.

“It’s like swiss cheese, not there when you need it.”

With the amount of consumer data now available better options can be developed, he added.

The Financial Solutions Lab is a $30 million, five-year initiative run by the Centre for Financial Services Innovation with founding partner JPMorgan Chase. Its goal is to identify, test and expand the availability of promising innovations which help improve Americans’ financial health.

The Center for Financial Services Innovation directs a group of financial services innovators looking to build a more robust financial services marketplace.