Financial Services Companies Pursuing Quality, Testing Innovative Small-Dollar Credit Products
New Research Highlights Consumer Preferences for Key Product Features
NOTE: Release originally issued by the Center for Financial Services innovation.
CHICAGO (July 3, 2014) –Today, the Center for Financial Services Innovation (CFSI) announced the creation of theSmall-Dollar Credit Test & Learn Working Group. Five leading financial services providers— Regions Bank, LexisNexis Risk Solutions, Kinecta Federal Credit Union, Enova Internationaland Emerge Financial Wellness—are piloting small-dollar credit products or product featuresthat put into practice many of the recommendations from CFSI's Compass Guide to Small-Dollar Credit.The Compass Guide establishes clear standards of quality for small-dollar credit products.Through the Test & Learn Working Group, CFSI will work with participating companies toevaluate the pilots, in order to better understand what works and to encourage replication ofsuccessful approaches that promise to improve the financial outcomes for millions of borrowers.
'These pilot projects are an important step in driving high-quality innovation in a marketthat needs it,' said Jennifer Tescher, President & CEO, CFSI. 'Credit can help consumersweather a financial shock, build credit, or smooth income fluctuations, and we believe theindustry can meet these needs with products that provide positive outcomes for providers andconsumers.'
The Working Group is funded by the MetLife Foundation, the Ford Foundation, and the Omidyar Network.
'We believe that supporting initiatives like the Test & Learn Working Group will offercritical insights into aspects of financial inclusion that will enhance programs and advanceour common goals,' said Dennis White, President and CEO of MetLife Foundation. 'We know thatproviding access to quality, affordable products and services for low-income individuals andfamilies is important, but it is equally important to ensure that these programs advanceresearch and deepen knowledge in this area.'
This announcement coincides with the release of CFSI's latest research on small-dollar credit consumers,'Design Matters: Learning from Consumers' Experiences with Small-Dollar Loans.'This analysis of qualitative data focuses on borrowers' experiences with loan structures,repayment policies, customer service and opportunities for economic mobility.
The results highlight demand for a new generation of products, underscoring the importance of theWorking Group's efforts to identify and test products that align provider and customer success.
The members of the Working Group are:
- Regions Bank is piloting changes to its existing savings-secured installment loan that enable customersto borrow with as little as $250 in savings.
- Kinecta Federal Credit Union will begin piloting, in mid-June, a payday consolidation loan that will allow customers toconvert multiple outstanding payday loans into a single installment loan.
- LexisNexis Risk Solutions is offering its RiskView score to underwrite this loan.
- Enova International is piloting a new feature that allows customers of its online NetCredit Gold product tocustomize their loan terms and monthly payment amounts.
- Emerge Financial Wellness is piloting ways to increase take-up and usage of an optional 'Save as You Repay' feature,which allows borrowers of its workplace-based installment loan product to contributeadditional funds to a savings account each time they make a payment.
To learn more about CFSI's Compass Guide to Small-Dollar Credit, visit here.
To read 'Design Matters,' click here.
The Center for Financial Services Innovation (CFSI) is the nation's authority on consumerfinancial health. CFSI leads a network of financial services innovators committed to buildinga more robust financial services marketplace with higher quality products and services. Throughits Compass Principles and a lineup of proprietary research, insights and events, CFSI informs,advises, and connects members of its network to seed the innovation that will transform thefinancial services landscape. For more on CFSI, go to http://www.cfsinnovation.com and follow on Twitter at @CFSInnovation.
NetCredit, a service of Chicago-based Enova International, is a licensed online lender forsmall personal loans, and an ideal choice for consumers who cannot qualify for a traditionalcredit product through their local bank. A trusted online provider, NetCredit ingrains a'customer first' attitude into everything it does, and works hard to deliver the bestfinancial services to close the credit gap for underserved customers.
Additional information may be found at www.netcredit.com.
Enova believes everyone deserves access to simple andtrustworthy financial services and works to close the credit gap for underserved consumers.
A wholly-owned subsidiary of Cash America International, Inc. (NYSE: CSH), Enova is a trustedonline provider of credit alternatives for more than 3 million hard-working people worldwide.Our advanced analytical models provide automated and real-time approval of customers' loanapplications, significantly faster than traditional loan processing. Headquartered in Chicago,Enova has more than 1,100 employees serving our global customers.