> Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI

A few weeks ago J.P. Morgan made a $30 million commitment to create the Financial Solutions Lab, a move representative of the growing recognition among all financial stakeholders of the importance of financial capability.

The Financial Solutions Lab, a five-year initiative, will be managed by the Center for Financial Services Innovation (CFSI) and it seeks to bring together experts in behavioral economics, design, technology, and nonprofit services in order to develop innovative and scalable financial products and services that strengthen client financial capability and well-being. Ideo.org and ideas42 are to serve as strategic partners on the initiative. By bringing these stakeholders together, the Lab aims to identify new ways in which customers can improve credit behavior, increase savings, and build assets.

The Lab will host a series of competitions for social entrepreneurs to identify tech-enabled products and services that address customer needs. The winners of these competitions will receive capital, technical assistance, and third-party evaluation.

This effort by J.P. Morgan expands on previous initiatives from CFSI like the Financial Capability Innovation Fund, the Financial Capability Innovation Fund II, and the Financial Capability Innovators Development Lab.

Although the Financial Inclusion Lab has a U.S. focus, it is a step in the right direction for the entire industry in terms of cross-stakeholder collaboration to operationalize insights. This is, arguably, one of the biggest challenges that lies ahead in the financial capability arena. Research and insights need to be translated into functional business models that appeal to financial services providers.

To me, it is not surprising to witness such interest in innovation in the area of financial capability. Financial capability took center stage at the Financial Inclusion 2020 Global Forum in London last October as one of the main issues in achieving financial inclusion. From nonprofit organizations like Microfinance Opportunities, which focuses on financial capability development, to private financial institutions like J.P. Morgan, Citi, and MasterCard, this topic has gained significant importance. Furthermore, we are increasingly seeing governments include financial capability in their financial inclusion strategies. Here in the United States the President appointed an Advisory Council on Financial Capability. These are all good signs, but is this movement taking us where we need to go?

Now that more players in the financial inclusion field have an understanding of financial capability, its paramount importance, and the significance of mobilizing all relevant stakeholders, what are the next steps? Let’s make sure that the debate leads to active implementation of the insights generated through attractive business models. The scaled roll-out of financial capability innovations will be the true significance of the investments J.P. Morgan and others are making in idea generation.

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