A new initiative from the Filene Research Institute aims to track consumer money management in the wake of the economic fallout from the coronavirus.
The four-year project is part of Filene’s Center of Excellence for Consumer Financial Lives in Transition, which was launched at the end of February. The center is led by Lisa Servon, a professor of city planning at the University of Pennsylvania.
Research from the program is intended to assist credit unions in how they serve members, especially amid the pandemic and the associated economic fallout. This is Filene's second of six research centers. The first
"I think the research is incredibly relevant,” said Taylor Nelms, senior director of research at Filene. “The ways that people are making and managing money has been put under extraordinary pressure from the coronavirus pandemic.”
The center’s research will focus on shifts in the political and economic environment that have changed economic security within the United States. Such transitions include stagnant wages, income volatility, deepening inequality and growing indebtedness. These topics have become relevant for an increasing number of Americans as jobless claims rise due to COVID-19. Other topics of study include health and health care costs, the criminal justice system and the changing nature of work.
According to Filene, credit unions may be able to alleviate financial burdens consumers face by developing an understanding of the timing behind when people move through financial transitions. Such transitions could include changes in health or employment status. Nelms said it’s already clear that different portions of the population face an unequal distribution of financial vulnerabilities.
“What we’re seeing with COVID-19 crisis is very similar, Nelms said. “There are particular populations that are more vulnerable to the virus" and "are also more vulnerable to the economic fallout from the pandemic.”
Credit unions can address this directly by making sure they design their services, conduct outreach with their communities and examine their membership through a lens of equity and inclusion, Nelms added.
Filene suggested credit unions have a playbook to look to during tough times. Besides increased pressure on net interest margins, CUs will also have to become more efficient, look carefully at the composition of their loan portfolios and remain aware of dropped earnings throughout the year.
“There's obviously questions around the economic environment and how you navigate depressed low-rate environments,” Nelms said.
Filene intends to release a white paper with more research findings in the coming weeks.
