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Accessible Financial Services Incubator

During the past two years Filene tested five innovative products designed for low-and moderate-income consumers. In this report we share our results on the efficacy of these products and their potential for long-term sustainability. 

Executive Summary 

Drive through a low- income neighborhood in virtually any American city and it quickly becomes apparent that the area’s financial health is at risk. The giveaway? The abundance of payday lenders.

According to the St. Louis Federal Reserve, there are now more than 20,000 of these organizations across the country—which tops even the ubiquitous McDonald’s storefront by roughly 40%.

These alternative financial services providers offer short-term loans at interest rates that can top 400%. They appeal to desperate consumers with no access to traditional, more affordable credit and offer an immediate fix that can lead to months, if not years, of financial pain. In its Payday Lend-ing in America series, the Pew Charitable Trusts reports that Americans spend roughly $7.4 billion (B) on payday loans each year.

Could traditional financial institutions find a way to deliver credit to this consumer niche without compromising their own health? The Filene Research Institute, a consumer finance think-and-do tank, hypothesized that the answer was yes.


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