JPMorgan Launches Financial Solutions Lab
American Express just got a little competition in its efforts to appeal to those living outside the financial mainstream. On May 29th, banking giant JPMorgan Chase & Co. announced that it has committed to invest $30 million to create the Financial Solutions Lab.
A collaboration with the Center for Financial Services Innovation, the new Financial Solutions Lab will tap the expertise of entrepreneurs, non-profits and academics to develop products and technologies to help people save more money and build better credit. The new venture is geared towards helping those who are not fully served by the current financial system. “Living outside the financial mainstream puts financial security further out of reach for one out of every four American households that rely on high-cost, non-bank services to manage their finances,” says Bruce McNamer, the CEO of the JPMorgan Chase Foundation. “The Financial Solutions Lab will bring together the best and the brightest to identify innovative solutions that help consumers increase savings, improve credit and build assets.”
Buttressing its decision to launch the Financial Solutions Lab, JPMorgan Chase and the University of North Carolina at Chapel Hill also released a white paper that illustrates the need for improved financial services. For instance, the paper notes that less than 10 percent of working American families are financially prepared for retirement while more than half do not have an adequate emergency fund. The research also shows how important savings can be as a vehicle for upward mobility. Indeed, 71 percent of kids born to low-income parents who managed to be big savers were able to move out of the bottom income quartile.
This new JPMorgan Chase initiative will, among other things, host competitions that encourage social entrepreneurs to devise ways to help encourage saving and credit building. In doing this, JPMorgan is echoing American Express’s well-publicized efforts to provide solutions to millions of so-called unbanked Americans. Besides its checking account alternative Bluebird and Serve prepaid cards, American Express sponsored a new documentary film, Spent, which shines a light on the difficulties and expense those who don’t have bank accounts or credit cards face to do simple tasks like pay bills and cash checks.