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Building Emergency Savings
Inclusiv and Common Cents Lab are working together to help low-income people build emergency savings and improve their financial security. Through this partnership, Inclusiv and Common Cents Lab, an applied financial behavior research lab within the Center for Advanced Hindsight at Duke University, are designing and implementing savings tools that make saving easier and more compelling for members of community development credit unions across the country. In addition to increasing the emergency savings of credit union members, Inclusiv’s goal is to build knowledge in the asset building and financial services fields about effective solutions to address the national savings challenge. For years, CDCUs have successfully employed simple technologies, such as small savings installments and small dollar loans, to help low-income consumers avoid predatory loans and increase their financial well-being. With a history of providing both savings and credit services for low- and moderate-income people, and a network spanning over 400 credit unions serving more than 15 million people in the United States and Puerto Rico, Inclusiv member CDCUs are uniquely poised to test and scale savings strategies.
The initiative focuses on three innovative savings interventions detailed below.
The Digital Savings Initiative
In the Digital Savings Initiative, Inclusiv is leveraging its Inclusiv/Technology's CU Impact, core technology and digital banking platform, to deploy a tool that streamlines enrollment into automatic savings for all online and mobile banking users at participating credit unions. The nearly 15,000 digital banking users at the participating credit unions are provided with the opportunity to deposit a percent of their paycheck or a set monthly amount from their checking account into the savings account of their choosing.
This experiment launched in 2021, and Inclusiv and Common Cents Lab will be sharing outcomes and findings in 2022. All of the five currently participating credit unions serve a majority low-income memberships, and four of our participants are Minority Designated Institutions serving majority communities of color.
|Engage Federal Credit Union||Natchitoches||LA|
|Greater Cleveland Community Credit Union||Cleveland||OH|
|Guadalupe Credit Union||Santa Fe||NM|
|Lanai Federal Credit Union||Lanai City||HI|
|Northern New Mexico School Employees Credit Union||Santa Fe||NM|
In the last year, due to the pandemic, credit unions experienced a dramatic growth of the digital platforms. With remote banking a necessity for many members, digital savings options, especially for low-income members, are more critical than ever.
The Savings Replication Program Initiative, which aims to implement and expand emergency savings pilots, include six credit unions (with four financial cooperatives from Puerto Rico) participating in the Check Cashing Savings Pilot Program and three credit unions participating in the Auto Loan Payment Round-up Savings Pilot Program.
Check Cashing Savings Pilot
Many CDCU members prefer cash transactions, like check-cashing, and therefore are very active transactors, but tend not to be savers. To support these members to begin building their savings, Inclusiv and Common Cents Lab are conducting a pilot, originally tested with Inclusiv Network member Latino Credit Union, that encourages members to save a portion of their checks into savings accounts using redesigned deposit slips available at credit union and cooperativa teller lines.
|New Orleans Firemen's FCU||Metairie, LA|
|San Rafael Cooperativa||Quebradillas, PR|
|Puerto Rico Federal Credit Union||San Juan, PR|
|Cooperativa de Ahorro y Credito San Jose||San Jose, PR|
|Alternatives Federal Credit Union||Ithaca, NY|
|Cooperativa de Ahorro y Credito Mayaguez||Mayaguez, PR|
Auto Loan Payment Round-up Savings Pilot
In this pilot, savings is built into credit unions’ auto lending. As credit union members apply for new auto loans, borrowers will be asked if they want to “round up” their loan payments to the closest “round” number - for example, to make monthly payment of $250 instead of their actual $217 loan payment and to send the rounded-up portions of the payments into a dedicated savings account. Given that lending is at the core of credit unions’ business and credit union loans are often the lowest cost option for low-income people, particularly for those with poor credit, lending can be an ideal avenue to build savings. This draws on previous product development, including Inclusiv’s Borrow and Save program and loan products tested at Inclusiv Network member Guadalupe Credit Union.
|Multipli Credit Union||Springfield, MO|
|Great Lakes Credit Union||Bannockburn, IL|
These pilots are queued up to start in the next few months, and Inclusiv looks forward to sharing our findings and best practices in late 2022.
The initiative is supported by BlackRock.