Innovation Grants Finance CU Research Projects
CHICAGO – The Center for Financial Services Innovation awarded $1.5 million in Financial Capability Innovation grants to five groups, including $300,000 to credit union think tank the Filene Research Institute for its study whether rewarding timely loan payments with interest rate reductions leads to better payment behavior.
Also receiving an innovation grant is Brooklyn Cooperative FCU, which as part of the Grow Brooklyn project and Piggymojo is studying how to use goal visualization, social dynamics and mobile technology to help low-income savers turn impulse buying into impulse saving.
The Filene project, “Lift: Lower Interest for Timeliness,” is a loan concept that provides incentives for healthy financial habits. As users make timely payments on their loan, they are rewarded with a lower interest rate. The concept allows users to pay off their loans faster and reduce the amount of interest paid. It also helps them establish healthy financial behaviors and earn the opportunity to bring down their interest rate.
Other winners were: Consumer Credit Counseling Service of Delaware Valley, which will test whether social commitments and text alerts can help consumers reduce debt; Co-opportunity, which will leverage technology via a new online platform to enhance the effectiveness and scale of its volunteer budget coaching program; and, Mission Asset Fund, which will franchise its Cestas Populares program, a peer loan coupled with product-specific, peer-led education to help immigrants build credit and manage credit wisely.
Researchers will evaluate each of these innovative projects to measure their impact, CFSI said.
The projects were chosen from 246 applications in 44 states.
The innovation fund is supported by a variety of entities, including Citi Foundation, Bank of America, Capital One, Morgan Stanley, Experian, U.S. Bank and Visa Inc.