The 30-month grant, the largest ever received by Filene, will enable the institute to test, package and scale innovative, viable financial products that benefit low- and moderate-income U.S. consumers.
“This grant enables Filene to launch an accessible financial services incubator to test products that counter the alternative financial sector practices detrimental to the wallets of America's hard working households,” said Mark Meyer, CEO of Filene.
“It leverages credit unions' historical role as a proving ground for consumer-centric innovative financial products to test viability and adoption,” he said.
Filene will select 25 U.S. credit unions and five products for an 18-month pilot, scheduled to begin in November. Credit unions interested in testing potential incubator products and organizations with potential product innovations may apply to participate in the program through the organization’s website at www.filene.org.
“The goal is to test five consumer-centric financial innovative products in 25 credit unions, reaching a total of at least 5,000 U.S. consumers in the testing phase,” said Meyer. “We'll advance the most promising concepts with the end result of large-scale implementation and commercialization of at least one of the five products.”
Filene will test, package and deliver viable financial products through the incubator’s three discrete phases:
- The lab – testing promising product ideas
- The factory – manufacturing innovations and packaging products for mass adoption
- The marketplace – distributing products through in-person and open-source online marketing
The incubator will use credit unions as the proving ground for the developed products to test their viability with mainstream financial institutions.
An advisory panel of financial institution staff, researchers and industry analysts will ensure the viability of the selection, testing and marketing of the incubator’s product ideas, Meyer said.
“A critical piece of innovation is execution,” said Meyer. “The grant brings resources and focus to prototyping, testing, learning and scaling financial innovations for the marketplace. It also gives Filene the resources to fortify an innovation process that drives meaningful change beyond this grant.”
The grant comes as one in five households, or 24 million American homes, are underbanked and lack access to affordable financial services. The socioeconomic disparity is compounded by the racial and ethnic disparities among persons denied credit. Currently, 53% of African-Americans, 44% of Native Americans and 43% of Hispanics are underbanked.
The grant, three times larger than next largest grant Filene has ever received, will enable the organization to hire a director of innovation labs to lead the incubator.