Joining Forces for Financial Health: Creating Feedback Loops
Editor’s Note: This is the third and final in a series of blog posts that shares how innovative nonprofits have addressed key questions raised by nonprofit practitioners about fintech partnerships.
The fintech marketplace is booming. It seems like every day brings another startup or new app to help people manage their money. The industry has been experiencing a surge of energy, investment and talent as new providers and traditional institutions seek to re-design the financial services experience. But is this newfound world of fintech being built to include everyone or is it leaving underserved communities behind?
While many nonprofits share these concerns about fintech products, they also realize the potential fintech has to help their clients. In our first blog, we heard nonprofits express interest in adopting fintech products (85% of survey respondents) while simultaneously being concerned about finding fintech tools “that don't harm our participants in any way.” In our second blog, we saw how some nonprofits have carefully navigated the fintech ecosystem to vet and partner with providers offering products and tools with the potential to support clients’ financial health.
This post highlights best practices for building feedback loops into partnerships between nonprofits and fintechs, drawing from the experience of grantees of the Financial Health Network's Nonprofit-Fintech Exchange. With the support of the Financial Solutions Lab—a joint initiative managed by the Financial Health Network with founding Lab partner JPMorgan Chase & Co.—the Exchange supported and learned from nine pilots working through the challenges and opportunities of nonprofit-fintech partnerships. The Financial Health Network recently released a report, Cross-Sector Solutions: A Guide to Nonprofit-Fintech Partnerships, that documents outcomes and best practices emerging from the grantee projects.
Such partnerships between nonprofits and fintechs create an opportunity to promote broader inclusion in fintech's evolution. Nonprofits can help clients navigate the complex fintech ecosystem to identify and test intriguing options while gathering insights on what works for them and what doesn't. These perspectives serve as valuable feedback for fintechs as they often surface friction points in the client experience that can act as barriers to underserved low- and moderate-income households. Feedback from nonprofit clients can also uncover new opportunities for providers to address their unmet needs.
Three Best Practices for Creating Feedback Loops
The grantees' experiences highlighted the potential impact of effective feedback loops as partners worked together to adapt processes and products based on client insights. For instance, Consumer Action found that clients within its network organizations liked Self-Lender's credit-building product but were unable to afford the minimum monthly payments. Self-Lender responded by offering to create a special version of the product for Consumer Action’s affiliates with lower minimums to increase accessibility. Grantee and Exchange members' experiences uncovered the following three best practices for creating feedback loops in nonprofit-fintech products.
Start With Vetting
Asking questions about client fit during the vetting process can uncover gaps or barriers in the market. For instance:
- Do a nonprofit’s clients have the tech they need to use a tool effectively?
- What forms of identification are necessary to use a particular product?
- Is the content and the customer experience designed to appeal to a nonprofits' clientele?
By undergoing the vetting process, Exchange members were able to identify gaps in the fintech marketplace such as several members serving predominately Spanish-speaking communities finding a lack of fintech products with bilingual interfaces.
Build Processes Early
When putting together plans to present vetted fintech products to clients, nonprofits should design a process to collect insights on their client’s experience and impacts on their financial health. These insights can be collected via transaction data, client surveys, focus groups or regular check-ins with frontline staff; the exact mix of tools to evaluate impact will depend on partners’ capabilities and access to data.
Pilot grantees found it critical to build in data collection processes at the outset of partnership pilots instead of trying to gather information after the fact. For example, EARN and LendUp established and tracked a set of customer outcome metrics (e.g., rate of LendUp borrowers linking bank accounts to SaverLife) to help gauge their success against their common goal of helping LendUp customers improve financial health.
Open Up Communication Channels
Nonprofit-fintech partnerships can vary significantly in how deeply the partners are engaged with one another. While some partnerships feature close collaboration to create a new program or product for clients, others involve nonprofits offering in-market fintech tools without any engagement with providers. Nonprofits and fintechs should seek to open a line of communication with partners that fits the mode of engagement. If partners are working closely, insights can be shared as a part of regular check-ins and systems for monitoring impact. If they aren't working together, nonprofits may be able to connect with providers for one-time conversations to share experiences and discuss potential improvements.
There is a great opportunity—and a great need—for nonprofits to act as a channel for bringing the voice of their communities into the fintech design process. The financial services marketplace stands to continue its rapid evolution toward all things digital. As a result, financial inclusion will increasingly mean having fintech products and tools that are accessible and designed to meet the needs of LMI and underserved households. Nonprofits can contribute to more inclusive fintech by opening feedback loops with providers and advocating for products and design features that improve the financial health of their clients.
In the “Joining Forces” series, we’ve explored the nonprofit-fintech partnerships and shared best practices from grantees and members of the Nonprofit-Fintech Exchange. Throughout our experiences, we’ve seen that such partnerships have great potential for impacting financial health but that actualizing this potential takes careful vetting, well-designed processes, and effective outcome tracking. We hope this series has been helpful in providing direction for organizations considering partnering with fintechs and look forward to continuing the conversation.
If you're interested in continuing the conversation and opening lines of communication with fintechs, join the Nonprofit-Fintech Exchange. The Exchange is a marketplace for interested nonprofit and fintech providers to explore collaboration and swap insights on how to build high-impact partnerships. Learn more here and request to join the Exchange – there is no cost for membership and we’re currently accepting new organizations.