JPMorgan Chase has announced a $3 million year-two challenge for technologically innovative startups, in conjunction with the Financial Solutions Lab (FinLab) at the Center for Financial Services Innovation (CFSI).
The firms said in a press release that the $30 million five-year program, through a virtual lab initiative, has “financial shocks” as the theme this year. FinLab is looking for innovative companies that provide solutions that dovetail with the CFSI’s Consumer Financial Health Survey and other financial research, including a Pew Charitable Trusts study that notes that 60 percent of Americans experienced a financial shock in the past year. Only six out of 10 households had enough liquid savings to cover a $2,000 unexpected expense.
The release went on to say that the JPMorgan Chase Institute projected that typical middle-income households needed approximately $4,800 in liquid assets to weather shocks but had $3,000 available. As a result of such a thin cushion, noted the research, individuals and families might have to draw down illiquid assets, invade retirement savings, borrow funds or even default on debts that are already outstanding.
The release also made mention of the winners of the first-year challenge, where cash flow was the focus. That competition had 300 applicants from private companies and nonprofit entities, which the firms said served the interests of more than 10 million Americans. The initial nine firms in the competition each garnered $250,000 in capital and strategic backing from FinLab partners, including IDEO.org. The inaugural class of firms included, alphabetically, Ascend Consumer Finance, Digit, Even, LendStreet, PayGoal by Neighborhood Trust, Prism, Propel, Puddle and SupportPay.
In a statement that accompanied the release, Jimmy Chen, founder and chief executive officer of Propel, stated: “The lab was instrumental in helping us grow our business and providing the expert insights we needed to expand our solution to more underserved consumers. In fact, the newest iteration of our product was inspired by collaboration we developed through FinLab, and this rethinking has made our product attractive for Silicon Valley-style investors as a result.”