MADISON, Wis. – The Filene Research Institute is seeking CUs to participate in its “Reaching Minority Households” pilot.
The incubator initiative will test solutions that improve the financial lives of minority families.
The effort follows research and a report by Filene that found minorities comprise 30% of all U.S. households but hold only 13.4% of deposits, 7.5% of retirement investments and 10% of total wealth in the country. That Filene report identified key factors that successful credit unions employ to serve this population—chief among them being targeted products and attractive pricing.
“We can improve access to financial services for all consumers without sacrificing the health of the organization,” said Andrew Downin, managing director, innovation for Filene. “Our research shows that when credit unions focus on the needs of minorities, both members and credit unions can thrive. Our goal in the Filene Incubator is to identify locally successful programs, test them across a broader set of credit unions, and share results with the credit union community for wide-scale implementation.”
The Reaching Minority Households Incubator, created in collaboration with Visa, will ultimately include up to 50 credit unions testing one of five programs designed to close the access gap. Programs were selected based on potential scalability and impact, among other factors. An advisory panel comprised of industry leaders aided the selection process. Filene will work closely with each credit union to provide implementation expertise and resources throughout the pilot. Past projects in the Incubator have had tremendously positive results for credit unions and their members. According to Filene, the five programs available for testing include:
Data Mined Auto Loans – Established by the National Credit Union Foundation, this program employs sophisticated data mining techniques to identify households that may benefit from an affordable auto loan. Results from a large industry data provider indicated 250 credit unions used similar techniques to write 300,000 loans worth $2.5 billion to members with credit scores under 640.
JOB Program - A microfinance lending initiative to help members start their own small businesses, pairing needed funds with training in business basics. The program has been offered for three years at Kingsville Community FCU. Since the program’s inception, nearly $1 million has been loaned and many small business owners have found a path to success after being turned away elsewhere.
Non-Citizen Lending Program – Developed by Point West Credit Union in 2008, this program offers credit cards, personal loans, and vehicle loans to non-citizens at the same rates as traditional consumer lending products. As of 2015 the program has provided $2.1 million in loans to non-citizen borrowers with delinquency rates at 0.36%. And 70% of non-citizen borrowers have maintained or improved their credit score since joining the program.
Payday Payoff Installment Loans - Using an underwriting model based on alternative data that allows borrowers to consolidate up to $2,500 of high-cost debt into an affordable installment loan, Kinecta Federal Credit Union and Nix Neighborhood Lending provide access to affordable and responsible loans for underserved communities in Los Angeles. More than 28,000 payday loans have been consolidated into 7,500 Payday Payoff loans for a total of $8.5 million with a 5% net charge-off ratio.
QCash - An omni-channel lending solution that offers relationship based underwriting without a credit check to members in search of small, short-term unsecured loans with funding in less than 60 seconds. Built by Washington State Employees Credit Union and offered by QCash Financial for 10 years, the program better addresses the current payday lending landscape and the member’s need for convenient short-term loans.
Those interested in participating in the Reaching Minority Households pilot can complete the request form on filene.org,