FXD 2017: Financial Volatility and Opportunities for User-Centric Design, Melissa Gopnik, Commonwealth
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This document discusses Commonwealth's mission to strengthen financial security for vulnerable people through piloting solutions and driving innovations to scale. It provides data on people's financial situations, concerns, and banking habits. It also outlines potential innovations like prize-linked savings that aim to help people establish savings habits and experience financial stability by making savings easy, timely and fun.
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FXD 2017: Financial Volatility and Opportunities for User-Centric Design, Melissa Gopnik, Commonwealth
- 1. We build solutions to make people financially secure.
- 2. Mission Commonwealth strengthens the financial opportunity and security of financially vulnerable people by discovering ideas, piloting solutions and driving innovations to scale. We build solutions to make people financially secure.
- 4. Government & Non-Profit Walmart & Green Dot Bank Credit Unions Employers
- 11. Description of Financial Situation 37% 49% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Struggling Maintaining--just getting by Just Comfortable
- 12. Top Financial Concerns 46% 35% 33% 32% 28% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Saving for emergencies Managing changes in my income or expenses Saving for long- term expenses Paying for everyday expenses. Paying off debt
- 13. Trustworthy sources of financial information 68% 30% 19% 15% 11% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% My Family My Friends Large Banks Local Financial Institutions My Employer My Co-workers
- 14. 79% 54% 64% 21% 44% 32% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Checking Account Savings Account Onling Banking Uses Doesn't Use Unsure . Use of Banking Services
- 15. Innovations
- 16. Try a Savings Product Establish a Savings Habit Experience Financial Self-Efficacy & Stability Prize-Linked Savings Infrastructur e Behavior
- 20. Financial Volatility: Opportunity for Innovation Easy Timely Fun
Editor's Notes
- We discover new financial challenges and explore new innovative solutions through research, listening, and talking with people. We take the most promising of these new solutions and design real world pilots to see if they work. We then collaborate with partners to bring these proven solutions to scale and improve the financial security and opportunity of millions of Americans. The challenges of financial vulnerability are complex and require ingenious solutions. Solutions that: benefit individual American families and change the financial system. are unexpected yet practical and scalable. require us tapping into everyone’s creativity and wisdom – from financial services firms, employers, government, academics, think tanks, to the social sector. And most importantly from people who live with financially vulnerability on a daily basis. -
- The financial challenges faced by Americans are too many for one organization to be able to solve alone. Success depends on partnerships with the private, public, and social sectors at all stages of our work. We work with the actors/stakeholders who shape key systems impacting the lives of FV people. Examples include: financial services firms, employers, high schools, colleges, youth employment programs, state and federal government, fintech start-ups,
- Across sectors - Walmart & Green Dot Bank design savings feature on a their prepaid card, In 1 year Credit Unions in 12 states – with $170M saved by 70,000 account holders Tax time – both through non-profit and private sector tax prepares and changing govt policies to make savings easier at tax time. Games and Gamification to – Worked with Staples to design mobile games that taught financial literacy. – debt management and retirement prep, incorporated Staples benefits
- Ask audience – How many expect Income to be the same in November as October? JPMC graph - More volatile month to month then year to year – Fed reserve - 32% report that income varies month – month ; 43% report that expenses vary (fed reserve) –
- New - across all income – if are in Q 1 or 5, experience it. Some same reasons – 5 Fridays, tax refunds – medical exp some different reasons – change in work hours, Causes – income – 5th Friday, tax refunds, lmi – varied work hours Expense – health care costs, taxes, holidays
- How do you mitigate? Different IMPACT because different access to tools to mitigate JPMC – gap between savings needed and savings that people have 46% of adults could not cover $400 fed reserve 2016 Liquid assets Short term affordable credit (hybrid products) Income smoothing
- D2D – Doorways to Dreams - old name for Commonwealth
- National survey of MWW – end of august 78% made less than $10/hr - $21,000
- People know what they have to do. Framing of emergencies resonates with people
- Infrastrure problems Don’t trust
- 50% of employees we interviewed at Company A did not have a savings account, citing high account minimums and maintenance fees. Only 14% of banks that Company A employees use offered low-barrier savings products ($0 required opening deposit and monthly fees). On the survey, the response option “Not Familiar With Product” was not listed regarding checking and savings accounts
- Question is how do we address both the mind state and the landscape/product state.
- Combination of addressing Infrastructure – what is in environment AND Individual behavior
- 2 areas of Innovation - What is on offer – what is default – easy – option? Ex tried and true; Retirement - auto enrollment/contribution When is it offered – timing of offer – wedding planner for 22 year old. Ex NEW: Rise with your Raise; On-boarding – split deposit (not just direct deposit); Try experiment when get home – move healthy food to front of eye level shelves in fridge – get them out of being hidden away in drawers. If you really want to try this, in your cupboards put cookies/chips on the top most self in back, and put healthier option at eye level on lower shelves. Don’t tell anyone – and just see what happens ! • A study in the UK showed that retirement plan participation rates jumped from 61% to 84% when they were set to automatically opt-in. (Source)
- Prizes can promote positive financial decisions. For centuries prizes have motivated people to act. Americans spend $70 billion on lottery tickets each year in the hopes of winning a prize. The possibility of winning creates excitement, anticipation, and engagement. At Commonwealth we apply this insight to motivate positive financial behaviors that lead to financial security and opportunity. Commonwealth’s first application of this insight was to promote savings behaviors at credit unions. We have since experimented with prizes to promote tax time savings and savings on prepaid cards. Our research results have repeatedly found that prizes provide the motivation needed to get people to start saving and build a savings habit. We believe that the power of prizes can be applied to solve other financial challenges that demand excitement, engagement, fun and a sense of reward.
- Gamification provides a way to turn tasks into fun and engaging activities that lead to real world action. From puzzles to team sports to video games, people like games. By applying game mechanics to traditionally mundane or stressful activities, they can be made less stressfull, more fun and therefore engaging. They can also lead to real world action taking and behavior change. It’s been done for fitness, with friends competing for steps on Fitbit, or walking miles with Pokémon Go. We work to apply these concepts to financial challenges. We have applied game mechanics to build financial capability – Fe change savings behavior - SQ app – make pig dance to build understanding of options to finance higher education.
- We are looking to collaborators to work with us Income 5th Friday – Unrestricted saving as a benefit? Financial services offering PLS product through employers? Expenses Health Care expenses - Auto-contribution