MADISON, Wis. (11/26/13)--The Filene Research Institute will test four products to benefit low- and moderate-income consumers in its new financial services incubator.
The four products were selected from more than 20 submissions. An advisory panel of financial institution staff, researchers and industry analysts helped Filene choose the products.
Filene's financial services incubator was launched with a 30-month grant of $700,000 from the Ford Foundation to benefit underbanked consumers. The incubator will test, package and scale financial products that Filene deems innovative and viable to aid low-and-moderate-income U.S. consumers and provide alternatives to predatory products.
The products to be tested include:
- Non-prime Auto Lending, from the National Credit Union Foundation. The program helps lenders fairly price and manage non-prime auto loans, incorporating the Lower Interest For Timeliness (LIFT) idea introduced by Filene's i3 innovation team. LIFT is a loan feature that reduces interest rates when members make on-time payments.
- Borrow and Save, from the National Federation of Community Development Credit Unions. This product increases consumers' economic security by providing an affordable small-dollar loan with a payment term that makes sense for them. A built-in savings component also helps consumers to self-fund their emergencies instead of borrowing money to handle them.
- Pay Yourself Back, from Innovations in Poverty Action. As an add-on to any loan type, this product seamlessly converts borrowers into savers. Leveraging the habits formed by regularly making loan payments, it encourages consumers to keep making regular payments (or a portion of it) to themselves after the loan is paid off.
- Employer Sponsored Income, Advance Loan, from North Country FCU, Chittenden, Vt. This small-dollar loan program is offered to employees of select employer groups partnered with credit unions. Loan payments are auto-deducted from direct-deposited paychecks. Once the loan is paid, employees may continue making payments into savings accounts.