It’s a statistic we’ve heard on newscasts and in any number of settings over the past few years. More than 40% of Americans would struggle to find the funds to pay an unexpected $400 expense.
So how do you make savings easier and more intuitive for individuals and families?
You partner with mission-aligned organizations to develop a meaningful and sustainable solution. One that’s not the result of competing with others in the marketplace, but instead built on solving the problem within communities by increasing consumers’ financial well-being.
That’s what happened when VisiFI and Common Cents Lab at Duke University joined with the Inclusiv FIT Council to participate in the Building Emergency Savings initiative. The project targeted low- and moderate-income individuals in an effort to enhance their financial inclusion and improve their financial health. Offered through Minority Designated Institutions, like the Guadalupe Credit Union in Santa Fe, New Mexico, the pilot is now a product offering.
The growing acceptance and use of digital technology by credit unions and members helped to create the connection and the approach was low-key and friendly.
The program introduced the idea of automatically depositing a percentage of a member’s paycheck or a set amount from their checking account to a savings account.
Banking and financial terms were replaced with simple ideas and language that invited members to participate when they logged in to check deposits or balances as part of their routine. The use of simple words and questions made the choices simple and made the process of savings easy – and always ensured the member was in control. So, as circumstances changed in their lives, they could change settings, amounts and even access savings.
For example, credit union members not only want their financial institution to provide financial services, studies show they want the financial institution to assist them with the decision. That means showing the member that you understand what they need and having the tools to take the information they provide, analyze the opportunity using algorithms and actual data – then communicating the options available to them in a conversational language that’s simple and easy to follow.
Phrases like, “let’s find the right loan for you,” “good choice,” and “you did good today” all become part of a meaningful “dialogue” you’re able to have with members. Even the use of graphics, like populating the background with a medical bill and a picture of a nurse with heart hands for members health-related loans, or books and a diploma for a college book loan take away the anonymity of the typical loan process. Providers like VisiFI have integrated their solution with JD Power to perform evaluations and display the actual features of the vehicle.
The Guadalupe Credit Union paired their savings pilot with a loan program. It allowed members to designate up to 10% of the loan payment to go into a CD (certificate of deposit) that would mature when the loan matures. The program was called Pay Yourself First and resulted in 1300 CDs being opened with a total balance of $595,443.78 and an average balance of $458.38.
In addition to helping members build and maintain emergency savings, it has allowed them to save for home and auto down payments, buying a heater in a home, cover expenses after a job loss and even use funds following a house fire.
Guadalupe Credit Union has also applied the capability to other products including automotive savings and round-up savings.
Through the use of artificial intelligence or AI, VisiFI and its partners will continue to enhance the user experience – and also increase the likelihood that members will adopt savings as part of their routines.
We’ve learned that simple language, brief work processes and a few initial prompts increase the likelihood for participation. Even the amounts and frequency of transfers to savings taught participants more about how to structure successful savings programs.
In the process, it’s hoped that it will address the national savings problem, enabling low- and moderate-income to improve their financial well-being – especially in communities that face the greatest risk.
At VisiFI, we’re already extending what we’ve learned to other savings vehicles and helping credit unions to adapt these digital tools and capabilities to programs that make sense to their members.
