In Search of Fintech for Debt Management and Repayment

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JUNE 2020

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In Search of FinTech

For Debt Management

and Repayment QUALITATIVE USER TEST RESEARCH FINDINGS IN THE

ADDRESSING DEBT IN BLACK COMMUNITIES PROJECT

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

In Search of FinTech For Debt Management and Repayment

Authors

Spectra Myers, Ivan Avila and Cat Goughnour

Acknowledgments

We wish to thank the team who made this report possible. Our partners at the Bedford Stuyvesant Restoration Corporation, Bon Secours Community Works and the Urban League of Broward County invited clients to participate in the interviews, and staff often shared their reflections to inform this report. Applied Research interns Brian Williams, Jordan Beeker and Ethan Steakly supported background research, documentation and analysis. Our colleagues at Prosperity Now -- Pamela Chan, Hiba Haroon, Kasey Wiedrich and Lillian Singh -- provided helpful feedback and guidance. Santiago Sueiro and Melissa Grober-Morrow shared fintech tool recommendations. Joshua Sledge from the Financial Health Network, Chip Baker from FT Advisors, Audrey Perrott from Consumer Action and Ayanna Fortson from the National Urban League shared their insights and experiences with fintech. Lillian Singh, Kasey Wiedrich and Guillermo Cantor reviewed the paper and provided helpful feedback. Myrto Karaflos, Lauren Treadwell and James Durrah edited the paper and Sandiel Grant designed the layout and graphics.

This report was made possible with the generous support of MetLife Foundation.

About Prosperity Now

Prosperity Now (formerly CFED) believes that everyone deserves a chance to prosper. Since 1979, we have helped make it possible for millions of people, especially people of color and those of limited incomes, to achieve financial security, stability and, ultimately, prosperity. We offer a unique combination of scalable practical solutions, in-depth research and proven policy solutions, all aimed at building wealth for those who need it most.

About MetLife Foundation

At MetLife Foundation, we believe financial health belongs to everyone. We bring together bold solutions, deep financial expertise and meaningful grants to build financial health for people and communities that are underserved and aspire for more. We partner with organizations around the world to create financial health solutions and build stronger communities, engaging MetLife employee volunteers to help drive impact. MetLife Foundation was created in 1976 to continue MetLife’s long tradition of corporate contributions and community involvement. Since its founding through the end of 2019, MetLife Foundation provided more than $860 million in grants and $85 million in program-related investments to make a positive impact in the communities where MetLife operates. To date, our financial health work has reached 9.9 million low-income individuals in 42 countries. To learn more about MetLife Foundation, visit www.metlife.org.

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

Table of Contents

Executive Summary ...... 4 Introduction ...... 6 Why Focus on Black/African American Communities? ...... 7 Why Consider FinTech for Debt Management? ...... 8 How Did FinTech Options Stack Up Against the Criteria? ...... 9 About the User Test and Feedback Interviews ...... 11 Summary Characteristics of the Testers ...... 12 Summary Findings ...... 14 Detailed Findings on the Tools’ Utility for Debt and Past-Due Bills ...... 16 Albert ...... 16 Pefin ...... 20 Insights for Financial Coaching and Counseling Organizations ...... 27 Insights for FinTech Developers ...... 28 FinTech Providers' Responses ...... 29 Conclusion ...... 30

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

Executive Summary

What is FinTech? Financial technology is the use of the internet and mobile applications (apps) to create financial services tools. Consumer Action citation: https://www.consumer- action.org/english/articles/improving-your-financial-health-with-fintech.

Debt and past-due bills negatively impact the financial lives of many low- and moderate-income Black/African American1 community members. These community members have not been afforded the full opportunity to earn fair wages, build assets like emergency savings and wealth, or be fully shielded by consumer protection, all parts of a financial continuum that protects against costly debt.

Prosperity Now’s previous research revealed that community members felt a financial app could be beneficial in helping them optimize repayment, saving both money and the hassle of tracking debts and other obligations. 2 Ideally, clients and community members would leverage fintech to get insights and manage their finances quickly and conveniently alongside and following meetings with financial coaches in service of their own financial goals. Prosperity Now developed criteria to search for potential apps based on the same research to center the expectations of the target audience. We then searched for options using the criteria to assess potential apps. While we found no existing tool that perfectly met the criteria, we found two with several of the features that community members wanted: Albert App and Pefin.

Prosperity Now collaborated with three local nonprofits—Bedford Stuyvesant Restoration Corporation (Brooklyn, NY), Bon Secours Community Works (Baltimore, MD) and the Urban League of Broward County (Broward, FL)—to test the utility of two financial technology (FinTech) tools to help address debt and past-due bills for Black/African American community members. They were also interested in the potential of these tools to complement their coaching services.

We tested these tools with partner clients through qualitative user tests.3 During these tests, we facilitated the app account creation process and captured reactions as clients (“testers”) navigated the tool. Then, we followed up with interested clients after two weeks to learn more about their experience with the tools.

1 Today, some people view “Black” and “African American” interchangeably, but many have strong opinions that “African American” is too restrictive for the current U.S. population. The term “African American” emphasizes origins in the African continent and history on the American continent. The term “Black” is used more broadly to include the collective experiences of the U.S. population. Approximately 10 percent of the 46.8 million Black people in the US are foreign born. See https://www.urban.org/urban-wire/say-african-american-or-black-first- acknowledge-persistence-structural-racism for additional perspective. As this project includes partner sites with significant Afro-Caribbean- descendent clients, we combine these terms to be inclusive of all, and we endeavor to be specific with sharing disaggregated data. 2 Myers & Chan (2018) Overdue: Addressing Debt in Black Communities. Prosperity Now. https://prosperitynow.org/sites/default/files/resources/Addressing_Debt_in_Black_Communities_1.pdf 3 User tests allow us to evaluate a product or service by testing it with potential users through observation while a participant completes a task or set of tasks and then debriefing their experience. See Prosperity Now’s Human Insights Toolkit for more information on user testing: https://prosperitynow.org/human-insights-tools-test. 4

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

Unfortunately, neither tool fully met the criteria and, therefore, Prosperity Now is unable to recommend a fintech tool as a complement to financial coaching for debt and past-due bill management. But testing offered deeper insight into what is available and working and what still needs refinement or innovation. Specifically, for these two tools, we identified the following high-level pros and cons.

Albert Pefin

Pros • Testers found Albert easy to use • Pefin gives testers the option to manually • Savings feature was well-received link accounts, which was a feature highly • Testers found the spending alerts and valued by testers reminders helpful • The long-term planning feature was also • Overall, the Albert testers felt the app a big plus, as it gives testers the option to was trustworthy and secure plan for big financial goals like retirement or purchasing a home • Pefin offers an income and expense tracker that testers found helpful

Cons • Most promising debt features were • The sign-up process is lengthy difficult for testers to find • Some testers noted their current financial • App did not overcome testers' situation was not represented (no option hesitation to link credit cards or other for “unemployed”) debt accounts • Tool did not prompt testers to share less • Tool did not prompt testers to share common debt types less common debt types • Plan appeared unachievable and lacked • Testers must link a bank account to short-term action steps have access to the tool; must also have a smart phone

While we saw how valuable features like income and expense tracking, alerts and planning for the future can be for community members, unfortunately, the capacity of fintech to support low- and moderate-income Black/African American individuals with complex debt and past-due bill situations still appears limited. We hope that our findings can lead to the development of more comprehensive solutions for the needs of individual Black/African American community members who are not only faced with challenging debt but also have faced a legacy of seemingly unfair practices and services.

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

Introduction

As part of a project focused on supporting Black/African American community members with debt and past-due bills, Prosperity Now tested the potential of financial technology (fintech) to complement the work of our financial coaching and counseling partners at Bedford Stuyvesant Restoration Corporation, Bon Secours Community Works and the Urban League of Broward County. The focus on Black/African American communities stems from how the unique history of this population drives racial economic inequity and how these lived experiences now contribute to racially disparate impact by debt. According to findings drawn from Board of Governors of the Federal Reserve System, “Survey of Consumer Finances,”4 Black/African American people appear to be more negatively affected by debt than any other group. Nearly one in five Black households has zero or negative net worth. Additionally, Black/African American families are the most likely to have high debt payment burdens, with nine percent having debt-payment-to-income ratios above 40%.6 Further, in a national survey conducted by Prosperity Now of Black/African American community members with debt, of the nearly 9 out of 10 with one or more challenging debts, 62.8% said they had to skip paying a bill or paid a bill late at least once in the past 12 months.5

In light of the socioeconomic reality of this disproportionately burdened demographic, the idea to explore fintech products arose from prior community level research conducted by Prosperity Now in which Black/ African American community members expressed interest in a financial technology tool that could give advice or recommendations on how to manage and reduce debt. 6 Prosperity Now used reactions to that concept to develop criteria and searched for a tool that would meet community members’ expectations and needs for guidance on debt management and repayment within the context of Picture: A coaching client tests out Pefin at Urban their larger financial lives. While our search did not League of Broward County identify a tool that was a perfect fit, we found two tools that had several of the features requested by our target audience. In asking financial coaching and counseling clients to try out these two tools, we learned more about what Black/African American

4 Survey of Consumer Finances (Washington, DC: Board of Governors of the Federal Reserve System, 2016) https://www.federalreserve.gov/econres/scfindex.htm 5 Prosperity Now (2020). Addressing Debt in Black Communities: A Comprehensive Brief Exploring the Potential and Limitations of Services in the Realm of Financial Coaching. https://prosperitynow.org/sites/default/files/resources/Addressing-Debt-in-the-Black-Community-A- Comprehensive-Report.pdf 6 Myers & Chan (2018) Overdue: Addressing Debt in Black Communities. Prosperity Now. https://prosperitynow.org/sites/default/files/resources/Addressing_Debt_in_Black_Communities_1.pdf 6

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

clients with debt expect and value from fintech. In this innovation brief, we share background on the project, our process for testing out fintech and what we learned that is relevant to clients, practitioners and developers of tools.

Why Focus on Black/African American Communities?

These user tests are part of a project that focuses on debt and past-due bills in the context of the socioeconomic reality of Black/African American community members who have been in the United States for generations.7 The median debt held by Black/African American households is $30,800, which is less than the national median. However, a worrisome sign of distress is that 27% of Black/African American households report missing or being late with a monthly payment.8 For these communities, trouble making debt payments is a critical symptom of the country’s growing racial wealth divide, as households use debt to make up for wage and wealth gaps. For comparison, Black households have substantially lower levels of wealth than White households across all income levels. In 2016, for example, median net worth for White households was $171,000, compared to just $17,600 for Black households.9

Black/African American community members have not been afforded the full opportunity to earn fair wages, build assets like emergency savings and wealth, or experience all consumer protections — all parts of a financial continuum that protects against costly debt. A deeper exploration of the roots of Black/African American debt can be found in our previous paper, Forced to Walk a Dangerous Line: The Cause and Consequences of Debt in Black Communities.10

By focusing the search and evaluation of fintech for debt management and repayment around this community’s socioeconomic condition, we hoped to have the insights of the people most affected by problematic debt inform how interventions should be tailored to solve for their circumstances (see Summary Characteristics of the Testers for additional detail). We also wanted to impart to our field and fintech companies interested in equity what can be done to better support people who bear the brunt of challenging debt while also looking to develop more comprehensive solutions.

7 Black community members from recent immigrant or refugee groups are served by financial coaching organizations, but data disaggregation has allowed for a more nuanced examination of variations in measures of financial well-being and, in some communities, has revealed meaningful differences in income, assets and debt obligations within racial and ethnic groups partitioned by more refined categories of ancestral origin. For more on this, see Addressing Debt in Black Communities: A Comprehensive Brief Exploring the Potential and Limitations of Services in the Realm of Financial Coaching (2020). https://prosperitynow.org/sites/default/files/resources/Addressing-Debt-in-the-Black- Community-A-Comprehensive-Report.pdf 8 Survey of Consumer Finances (Washington, DC: Board of Governors of the Federal Reserve System, 2016) https://www.federalreserve.gov/econres/scfindex.htm 9 Lisa J. Dettling, Joanne W. Hsu, Lindsay Jacobs, Kevin B. Moore and Jeffrey P. Thompson, “Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances,” Board of Governors of the Federal Reserve System, September 27, 2017. https://www.federalreserve.gov/econres/notes/feds-notes/recent-trends-in-wealth-holding-by-race-and-ethnicity-evidence-from-the-survey- of-consumer-finances-20170927.htm 10 Prosperity Now (2018). Forced to Walk a Dangerous Line: The Causes and Consequences of Debt in Black Communities. https://prosperitynow.org/sites/default/files/resources/Forced%20to%20Walk%20a%20Dangerous%20Line.pdf 7

IN SEARCH OF FINTECH FOR DEBT MANAGEMENT AND REPAYMENT

While the practitioners at financial coaching and counseling agencies we partnered with understand that addressing racial economic inequality will take large scale changes in systems at all levels, they are determined to provide clients with the best tools and solutions available to minimize the deprivation and chronic stress of financial crisis. Through this exploration, we attempted to answer the following question: How might we support Black/African American community members in optimizing their debt management strategies so that debt doesn’t stand in the way of their greater financial goals?

Why Consider FinTech for Debt Management?

Financial technology is the use of the internet and mobile applications (apps) to create financial services tools. People can leverage fintech to manage their finances quickly and conveniently outside of meetings with financial coaches and counselors, work towards financial goals and gather insights into their financial picture.11

In the initial discovery phase of this project, our team conducted in-depth qualitative interviews with Black/African American community members in Baltimore, New York City and Fort Lauderdale. While some of the community members had participated in non-profit financial capability programs, most had not. From participating community members, we heard how debt affects their lives, how they manage debt and their feedback on potential debt management and relief services that could be offered, including fintech.12 We shared these findings in a paper, Overdue: Addressing Debt in Black Communities.

The idea of a financial app was one of the most appealing options to community members. Many thought an app or online tool might help them manage and pay down their debt while increasing their savings, and some viewed an app as something that could be beneficial alongside other programs or services, such as financial coaching. Some felt that an app could be beneficial to manage debt on its own, but a few strongly felt it would be more beneficial alongside financial coaching services. Our partners were also interested in fintech to complement coaching, saying that it might provide support between sessions or help clients manage their debt after establishing a plan with a coach.13 Staff said that not all community members are able to attend multiple coaching sessions, so supplemental tools that support people to implement and monitor debt management and repayment strategies are appealing.

Using community member feedback on the general idea of a financial app for debt management, Prosperity Now developed criteria to vet fintech options. While the criteria may not be exclusive to Black/African American community members, we needed to establish criteria for fintech to serve this

11 Consumer Action (2018). Improving Your Financial Health with FinTech: A Beginner’s Guide to Personal Finance Apps. https://www.consumer-action.org/english/articles/improving-your-financial-health-with-fintech 12 Our team based a written description of a financial advice app off of a fintech called Cinch that appeared very promising but, unfortunately, went out of business before the user testing. 13 Myers & Chan (2018) Overdue: Addressing Debt in Black Communities. Prosperity Now. https://prosperitynow.org/sites/default/files/resources/Addressing_Debt_in_Black_Communities_1.pdf 8

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community that was informed by their socioeconomic status and how disparately it has been affected by debt because of a history and current system of unfair practices, as noted in previous literature Forced to Walk a Dangerous Line: The Causes and Consequences of Debt in Black Communities.14 The criteria laid out below were created to aid our search for fintech tools to address the needs and experiences of this community (see Figure 1).

Figure 1: Target Audiences’ Criteria for FinTech for Debt Management

• Provides recommendations to optimize debt management and repayment (i.e., suggest order of repayment, impact of increased payments on interest, etc.) • Gives greater insight into financial situation (knowledge of underlying income or expense dynamics) • Identifies ways to save money and helps testers to do so (i.e., option to automate, rewards or incentives, assess savings capacity given other obligations) • Tracks income and expenses • Is accessible by phone, computer and/or app • Offers security features like two-step account verification and passcode to access finances • Is free or low-cost • Does not require account linkage to address identity theft and privacy concerns

How Did FinTech Options Stack Up Against the Criteria?

The research team sought to identify one or more existing financial advice tools that might meet the criteria and potentially complement financial coaching, providing our partner organizations' clients with additional support to manage and pay down their debt. Through feedback and guidance from internal and external stakeholders, our team conducted a field scan of financial advice tools and apps using the community criteria as a guide.

We examined a wide array of financial technology, including a few tools that focused directly on debt, such as Unbury.me, Power Pay and Debt Payoff Planner, but we were deterred by the limited scope of the user interfaces of these tools, given the criteria. We subsequently reviewed budgeting apps and online tools like Mint, You Need a Budget, Clarity, Mvelopes and GoodBudget, which seem to provide well-liked budgeting tools that were particularly adept at helping testers catalogue expenses. But they did not appear to provide the guidance on debt management and repayment our target audience was looking for. Looking further afield, we examined fintech focused on other needs, such as savings and financial planning, but did so with the testers’ larger financial picture in mind. While we found no existing

14 Prosperity Now (2018). Forced to Walk a Dangerous Line: The Causes and Consequences of Debt in Black Communities. https://prosperitynow.org/sites/default/files/resources/Forced%20to%20Walk%20a%20Dangerous%20Line.pdf 9

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tool that perfectly met the criteria, we found two with several features community members wanted: Albert App and Pefin.

Table 1: FinTech Tested by Financial Coaching and Counseling Clients

Albert Pefin

Description Albert is a financial app that can automate Pefin is a mobile-friendly website that offers small amounts of money to save, track plans for testers to reach their financial goals. It testers’ budgets and alert them to unfamiliar provides guidance on how to save, how to charges or opportunities to cut costs. manage taxes, when to pay off debt and how to Testers can text with “Geniuses” to get invest. It is accessible by tablet, smartphone or advice from human experts. Testers need a computer and has optional account linkage. smartphone and must be willing to link their Testers can manually enter information like savings or checking accounts. 15 balances and interest rates. 16

Why Test Albert might help the target audience Pefin’s financial plans might appeal to the This Tool? through the debt paydown and pay off target audience because of the promise of credit card missions. Useful features: greater insight on how debt fits into a full financial situation. Useful features: 1. The debt burden breakdown on the financial checkup provided debt-to- 1. As testers create plans for retirement, income comparisons, guidance and the homeownership or to further education, amount of interest paid by testers. they receive information about how to 2. The app also attempts to help testers increase the feasibility of their plans. decrease bills and provides cash flow 2. The timeline feature visualizes an estimate information and overspending alerts. of when the debt balances will be paid off 3. The payment plan allows testers to see based on current interest rates and their current debt repayment strategy monthly payments. and provides suggested alternative 3. The option not to link a bank account was repayment strategies that testers can also appealing, given the target take, which may save money in the audiences’ concerns about identity theft, long run. fraud and privacy. 4. The app is free, and the option to use 4. Pefin is currently free to use with no the “Genius” feature to text with real monthly payments or additional paid people for a small additional cost was features. also appealing.

15 “The Albert App,” Albert. Accessed April 26th, 2019, https://albert.com/ 16 “Pefin, the world’s 1st AI financial advisor,” Pefin. Accessed April 26th, 2019, https://www.pefin.com/ 10

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About the User Test and Feedback Interviews

User testing is a process for evaluating the ease of use or “user experience” as individuals interact with a product or service, solve a problem or complete a task. By asking coaching and counseling clients to try out these two tools, we hoped to learn if either would meet the criteria and, if not, what it would take for fintech to better complement financial coaching and counseling programs and services provided to Black/African American clients with debt and past-due bills.

To understand how fintech can better serve this population, Prosperity Now staff conducted user tests of the two tools with financial coaching and counseling clients of Bedford Stuyvesant Restoration Corporation in Brooklyn, NY; Bon Secours Community Works in Baltimore, MD; and the Urban League of Broward County in Fort Lauderdale, FL, in the summer and fall of 2019. Each of these organizations are Black/African American-led, and primarily serve Black/African American community members with complex financial challenges. They each work to address the unique debt challenges of their clients.

Recruitment by Set-up and in- Follow-up Option to partners and person phone recontact after initial fintech feedback interviews after 3 months selection interviews 2 weeks

All three sites are in metropolitan settings, and as such, testers in these markets may have different experiences with these tools compared to those in suburban or rural settings because of varying technological infrastructures (access to technology, mobile signal reception, access to Wi-Fi, etc.)

Our three partner organizations recruited testers to the project and shared the two tools to see which they were interested in testing. Our team of researchers then met with each tester individually to help them set up the tool on their device of choice and capture their initial feedback. We then followed up with testers two weeks later to hear Picture: A coaching tester evaluates Albert at what additional feedback they had about the tool. Bedford Stuyvesant Restoration Corporation During these initial and follow-up interviews, testers shared their debt situations and experiences with fintech.

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Summary Characteristics of the Testers

All testers were current clients of our partners’ financial Total Number of Interviews: 28 coaching and counseling programs. The partner organizations recruited participants that fit the following Age profile to participate in the user tests: Median: 38 Range: 22-54 • U.S. Black/African Americans (excluding individuals from recent immigrant and refugee groups)17 Gender • Currently hold debt or past-due bills • Have the financial capacity to strategically repay debt Female: 71% Male: 29% as assessed by coaches by reviewing client income, expenses and obligations18 Number of Testers • Interested in using financial technology to manage Holding Debt Types: their finances • Urban, own or have access to a tablet, smartphone Credit Cards: 22 and or computer with reliable internet access Student Loans: 17 • Have a reliable email account they can access • Currently have an open checking or savings account Auto Loans: 13 (a requirement for using Albert) Medical Debt: 13

During our first round of interviews, we engaged 14 Debt in Collections: 13 testers on each tool. Nineteen of the testers participated Personal Loans: 6 in the two-week follow-ups, and four participated in a Past-due Utilities: 5 three-month follow-up call.19 The most prevalent debt Mortgage: 2

Rent-to-own furniture: 1 Testers by Community

Number Previously Used Fintech: Fort Brooklyn Lauderdale Baltimore Total Albert Testers: 9 Pefin Testers: 7 # of 7 4 3 Albert 14 Total Completed a Two-week Testers Follow-up: 19 # of Pefin 4 7 3 14 Total Completed a Three-month Testers Follow-up: 4

17 The partner organizations asked clients if they identified with a recent immigrant or refugee group as part of a related data disaggregation effort. 18 While the partners largely serve community members with low to moderate incomes, clients of any income were eligible to participate. 19 Testers were compensated with a cash incentive for the interview and a prepaid gift card after the completion of the two-week follow-up interview. No compensation was provided for the three-month follow-ups due to the brevity of the interview, which was kept at 5-10 minutes. 12

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type among testers was credit card debt, followed by student loans.

In a related project exploration shared in Addressing Debt in Black Communities: A Comprehensive Report Exploring the Potential and Limitations of Services in the Realm of Financial Coaching, we collected data with the partner sites to learn more about their Black/African American clients’ financial situations and the debt and consumer rights support provided through coaching. This effort helped illuminate the profiles of clients served by coaching organizations whose efforts might be supported by fintech (see Table 2). Each organization largely serves clients with low to moderate incomes, with little surplus funds at the end of the month and who have comparatively high debt loans.20

Table 2: Client Financial Situations by Site

Urban League (n=20) Bon Secours (n=23) Restoration (n=75)

Median Monthly $1,908.34 $1,232.33 $2,000.00 Income

Median Monthly $1,618.50 $1,147.00 $2,065.00 Expenses

Median Total $13,625.00 $4,739.00 $19,016.00 Debt

Median Credit 566 593 608 Score

20 Prosperity Now (2020). Addressing Debt in Black Communities: A Comprehensive Brief Exploring the Potential and Limitations of Services in the Realm of Financial Coaching. https://prosperitynow.org/sites/default/files/resources/Addressing-Debt-in-the-Black-Community-A- Comprehensive-Report.pdf 13

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Summary Findings

Our team reviewed notes from the in-person and follow-up interviews and organized the feedback to identify themes from testers’ experiences with these two tools. We analyzed the factors behind testers’ choice of the two tools, likes and dislikes, as well as any areas of confusion or concern. Paired with our observations during the set-up and in-person feedback interviews, we used these data to evaluate the tools against the community criteria for supporting Black/African American community members with challenging debt and/or past-due bills and issued an overall assessment.

HOW DID THE TOOL STACK UP AGAINST COMMUNITY CRITERIA? Criteria Albert Pefin

Provides Recommendations to Some recommendations are recommendations to optimize debt repayment available, but it is unclear how optimize debt present but buried too deep to directly access them and only appear with certain management and into app repayment financial characteristics

Gives greater insight into Gives greater insight into Financial plans provided some financial situation (better financial situation through insight into financial situation understanding of summary information and spending, savings and alerts debt dynamics)

Identifies ways to save Identified ways to save Assesses retirement savings money and helps testers money and some testers but does not provide testers to do so reported it helped them to do with next steps so

Tracks income and Tracked income and Tracks income and expenses expenses expenses and this feature only if accounts are was liked by testers automatically linked, which most testers did not do

Access by phone, Easily accessible by app Easily accessible through web computer and/or app browser

Secure No issues noted by testers No issues noted by testers

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Free or low-cost Free or $4 minimum Free contribution to unlock some features and text with human experts

Bonus points for not Requires account linkage Does not require account requiring account linkage linkage

Overall assessment Albert meets many of the needs While Pefin was initially appealing expressed by the target audience to testers, mainly due to the and was well-liked. However, only option to not link accounts, it lacks two testers found Albert’s debt- the debt features that the target related features. These features audience was looking for. Other need to be more visible to testers dislikes and usability for us to recommend this tool to considerations suggest this is not coaching and counseling clients the appropriate tool for coaching seeking support around debt. and counseling clients seeking support around debt.

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Detailed Findings on the Tools’ Utility for Debt and Past-Due Bills

Albert Figure 2: Albert Overview Tab What caught potential testers’ attention? During recruitment, the partners briefly introduced both tools to potential testers and asked which they might be willing to try out. As the user tests began, we then reintroduced the tools to testers. Testers affirmed their tool of choice or switched tools after navigating through each tool’s webpage. We then asked potential testers what influenced their interest in testing Albert. Many noted that the app looked easy to use and that they wanted help tracking their spending. A few were also interested in the “overspending” alerts mentioned on Albert’s website. A tester from Baltimore shared her hopes for the tool saying, “It will help me be more mindful about spending. I want to know how much money [I spent] and how much will be left.”

Testers only expressed an indirect connection to debt management as they explained their selection. For example, a few testers mentioned how Albert may potentially help with debt by providing insight into spending and thus might help them identify areas to cut back. One person felt that Albert could potentially allocate funds to a savings account and into debt accounts, although they weren’t sure if Albert had this functionality. Testers were undeterred by the fact that Albert did not explicitly focus on debt management, as they were excited about the tools that help manage their full financial lives, especially their desire to manage their budgets well and increase their savings.

SELECTION DRIVERS RANKED 1. Appealing graphics and looked easy to use 2. Easy to understand how the tool might help 3. Helps with tracking spending 4. Overspending alerts 5. Appeal of an app over a website 6. Helps with curtailing spending to avoid or pay down debt

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What did testers like about Albert?

Overall, Albert was well-liked by testers. Throughout the Figure 3: Overspending Alert testing period, most interviewees said Albert was easy to use. Many of these interviewees used the terms “simple” or “simplicity” to describe the Albert user interface. Others appreciated that Albert sends spending alerts and reminders, with several also mentioning the value of the spending categories Albert uses to organize expenses. A tester in Fort Lauderdale said, “It’s eye-opening. Helps me be more mindful of spending and saving since there is a certain screen on there about income coming in and debt going out.” Appreciation of the budgeting features was particularly strong among those who participated in the follow-up phone interviews. Some interviewees said these alerts had helped them reduce their spending.

During the initial interviews, some testers mentioned appreciating the savings features, including the automatic deductions into a savings account. We heard less about this during the follow-up interviews, which was interesting given the savings features’ initial appeal. Additionally, a few testers mentioned that they perceived Albert to have strong security features which they appreciated. Again, however, testers rarely mentioned features or benefits related to debt in their positive comments on Albert during the initial set-up or in the follow-up interviews. While testers mentioned how having a better sense of their expenses might help with debt management and repayment, they did not notice any additional information or guidance beyond this indirect benefit. For example, a tester in Fort Lauderdale said, “[I] didn’t get any advice on that really. I did get the notification on spending, like spending more on the light bill one month over the other.”

OVERALL LIKES RANKED

1. Easy to use/simplicity 2. Automatic savings feature 3. Alerts and reminders, specifically spending alerts 4. Security features/seemed trustworthy

What did testers dislike about Albert?

Only a few dislikes emerged during the testing period, and those varied considerably from tester to tester. While there were not enough common dislikes to rank, a couple of testers mentioned concerns about the automatic savings feature. They wanted more information about how withdrawals worked or said they preferred not to use Albert’s required savings account.

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What features did we hope testers might find helpful for debt management and repayment?

In our review of Albert, we identified a few features that Figure 4: Repayment Calculator appear to meet community members’ criteria for a fintech tool for debt management. Within the “Genius” tab, there are topics with useful guidance and tools for debt management. The “Debt Paydown” topic summarizes interest paid on credit card debt and prompts testers to set repayment goals. The “Credit Cards” topic has a “Pay Off Credit Cards” feature, which highlights balances and interest paid while presenting information on personal loans for consolidation. The “Repayment Calculator” shown in Figure 4 appeared to be a particularly useful resource for helping potential testers identify alternate repayment plans that might save them money on interest payments.

We also thought testers might receive personalized guidance by texting through Genius or might receive additional information through the alerts that often appear on the app. The Genius section has missions for student loans and lists these types of loans in the list of accounts that are linkable. Finally, the financial checkup score calculated by the app includes a component for debt burden, which reviews debt-to-income ratios with helpful contextual information to understand the score. Unfortunately, only two testers found any of these debt- related features on their own during the testing period.

Our analysis reveals that Albert testers did not receive the hoped-for guidance for debt management and repayment due to three major barriers:

1. The useful features for debt management are buried in the app; only two testers found them unprompted. Despite finding the app appealing and useful for tracking income and expenses, saving money and being alerted to reoccurring charges and bank fees, most testers did not find recommendations to optimize their debt repayment or factor in methods of debt management. In our final set of interviews, we began directing testers to these features, and those testers then expressed interest. During our three-month follow-up, one tester noted that they received guidance from Albert to increase the amount and frequency of their credit card payments to reduce their debt quicker. If these features can “grab” users earlier in the experience, it may lead to more usage.

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2. Testers also rarely linked all the relevant debt accounts, which likely limited the guidance the tool could provide them. Only a few testers linked additional credit cards, and most testers held debt accounts but opted not to link these accounts automatically or manually. The accounts held but not linked were student loans, medical debt, debt in collections, auto loans and personal loans. Testers had several reasons for not linking accounts, but the most common was struggling to find or match account credentials. Others had reservations about the safety of account linkage, found the prompts unclear and had accounts that aren’t accessible online. For some, it never crossed their minds to do so during their time with the app.

3. While appealing as an idea, no tester reached out through Genius to obtain any insight or guidance. Most testers that had follow-up interviews had installed Genius during the sign-up phase. None of these testers said they had used Genius in any capacity, despite having it installed. What else did testers say about Albert? While most testers found the app simple and tester-friendly, a few mentioned that navigating the app was confusing. It wasn’t always clear where to find tools and information such as the savings features. Additionally, some testers had lingering questions on Albert, such as how to manage the automatic savings features and how to correct their income or expenses if the amounts seemed inaccurate. One tester thoughtfully suggested that Albert add the option for testers to check their credit scores, and another suggested that giving testers a sense of their interest rates on credit cards would also be

One Tester’s Experience with Albert

“Ann” is working to address debt in order to improve her credit score with help from Bon Secours Community Works. With student loans, credit cards, an auto loan and debt in collections, Ann has been trying to simplify her repayment approach. Prior to using Albert, she tracked due dates on her phone and used her bank app to keep an eye on expenses. Despite being unable to link her related debt accounts, Ann was excited about the subscription alerts and having a better way to track spending from her linked checking account. After some initial challenges with the default expense categorization in the app, Ann found her footing and said how much she liked the bar chart showing spending history and income. Upon reviewing the expense summary provided by the app, Ann was surprised to learn her husband had accrued over $100 in ATM withdrawal charges during the past month. She vowed to speak with him about only withdrawing from ATMs in their network, saying, “I have a significant amount of income left. I should be thinking about my finances differently. I need to look at these fees.” While Ann did not find the debt-related features in Albert, she found value in the tool because of the insight provided on unexpected fees. Bringing similar insight to bear on Ann’s debt obligations would add value to her experience.

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helpful. Among those testers reached through the follow-up interview, 9 out of the 10 still found Albert appealing. At three-months, the one tester reached still found Albert useful.

Pefin

What caught potential testers’ attention? Figure 5: Pefin Home Page We asked potential testers what influenced their interest in testing Pefin, and most said that the option to not link either a bank or debt account was a deciding factor. Some shared examples of negative experiences with putting their personal information online, such as identity theft, as their reason for choosing Pefin. Others simply appreciated having the choice to link or not.

In a few cases, however, testers who did not have a bank account or online access to a bank account (a prerequisite for using Albert), and who were initially interested in using Albert, were asked to try Pefin. Pefin also caught potential testers’ attention with its investing and long-term savings features. Since debt is not the focus of Pefin, it is not surprising that only one tester mentioned debt repayment as part of their interest in the tool, saying “[Pefin will] help me for the future, such as saving for a house or a car. It might even give me advice. If you save more and spend less, that will help you with debt.” Other testers also mentioned spending tracking and savings as appealing features of Pefin.

SELECTION DRIVERS RANKED

1. Option to link/not link accounts 2. Investment and retirement goals 3. Help with savings 4. Help with paying off debt 5. General advice-like features 6. Help tracking spending

How was the account linkage process for testers? Pefin testers had the option to automatically link their bank or debt accounts to the tool, allowing the transfer of information from their accounts directly into the tool. Testers also had the choice to manually enter account information, such as entering the balance, monthly payments and interest rate of a student loan account. Most of the testers that selected Pefin -- unsurprisingly given the considerations

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above -- did not automatically link bank or debt accounts and instead opted to manually enter these accounts.

Since the option to not link accounts or share personal information was an important consideration for so many, we wanted to know how manually entering data would work for testers. We observed that testers often couldn’t remember all the needed information and would then skip fields, leave some information blank or make educated guesses to continue with setup. Manual entry is also time- consuming. These barriers likely resulted in an incomplete and inaccurate financial picture, limiting the amount and quality of tangible debt advice the tool might offer. Additionally, the option to manually enter information was not always apparent, leading the researchers to point this option out to testers. Pefin asks testers to go through this initial set-up process with little direction as to how long it will take and what information might be required, which leaves testers with the choice to input inaccurate account information or withhold information in order to continue with the signup process, resulting in inaccurate financial plans. One tester from Baltimore explained the challenge: “I want the best results. I’m not going to sit [at] a computer to try and guess everything. Rather go back home and get the accurate inputs.”

What did testers like about Pefin? Figure 6: Plans Making Feature Pefin was liked by testers in specific areas. Most testers valued the plans-making feature and long-term perspective that Pefin offered, such as planning for retirement, education or buying a home. One tester from Brooklyn said, “They have these things called financial plans. So far, I have the retirement. It’s nice that I can have these little plans. Gives me the peace of mind that I’m planning stuff. Don’t feel so lost. In the future, I’ll probably add buying a home.” Some testers felt that Pefin provided useful info on budget management by giving them a breakdown of their spending and thus might inspire them to reduce debt by helping them identify spending patterns and reallocate funds towards long-term financial goals. Some testers mentioned that Pefin might provide additional guidance on various financial aspects once they returned to it later to edit or add information. However, most testers shared during the follow-up interview that they did not go back to add additional information.

What did testers dislike about Pefin? As testers navigated the sign-up process, many expressed frustrations at the limited number of income and expense categories -- such as employment status -- that Pefin offers. A tester from Fort Lauderdale said, “Annual income is not my income. I would feel more assurance if it was monthly or bi-weekly 21

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[income]. I thought when it asked about income it would ask about specific sources.” This, in addition to the limited number of debt and past-due bill account types, further limited the tester’s ability to share a full and complete financial picture with Pefin.

While testers generally liked the plans feature, a few expressed fear or anxiety about Pefin’s suggested retirement plan, as they thought it was unachievable. One of these testers from Brooklyn said, “It can bring apprehension to people. Fear. It’s not real. And financial insecurity. It was saying I’m [needing] so much, and I’m like, ‘come on.’” Most financial coaching clients have low to moderate incomes, little- to-no wealth and often have limited-to-no emergency savings and no retirement savings. Testers expressed a strong interest in saving, but this concern reveals that the tool was not sensitive to their economic reality and financial starting points.

Three testers felt that Pefin did not provide enough guidance, with one explaining, “I think it’s better to just speak to someone else. It does not take a lot of things into consideration. This AI is just limited in its thinking.”21 During follow-up interviews, testers referenced some usability issues, such as challenges getting to the home screen, and expressed feeling overwhelmed by the site. During three-month follow-ups, two testers said that they would have liked to have heard more from Pefin, such as notifications like payment reminders. Lastly, two testers stated at follow-up that Pefin does not fit their current financial situation, such as being unemployed and not earning a predictable income, with one tester saying, “It would work better, I think, if my financial situation was different.”

What features did we hope testers might find helpful for debt management? In our review of Pefin, we identified a few features that appear to meet community members’ criteria for a fintech tool for debt management and repayment. Based on the Pefin risk assessment, the tool provided recommendations for monthly payments to reduce interest rates for student loans.

We were curious about whether testers would receive this kind of guidance for credit cards, personal loans and auto loans. Another feature of interest (Figure 7) was a timeline that visualizes an estimate of when debt balances will be paid off, based on the current interest rate and monthly payments.

Unfortunately, only one tester mentioned or came across the timeline feature or reported seeing the debt guidance that we found during our review of Pefin. This tester mentioned debt guidance and said that Pefin suggested that they should pay off their auto loan—by paying a little more each month—before they engaged in any investing. Testers rarely mentioned any other debt-specific features during the initial interview and follow-up phone call.

21 Pefin mentions the use of artificial intelligence as part of the “Personal Financial Advisor” feature that comes up during the account creation process. This feature gathers information on income, expenses, assets, interest in investing and financial plans. For more information, see https://www.pefin.com/ 22

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Figure 7: Estimated debt repayment time from Pefin

How does the tool stack up for savings? Recognizing that Pefin is first and foremost a financial planning app, we note that testers found the savings plan feature useful for intermediate-term goal-setting but lacked short-term goals and action steps to reach them. As testers answered questions to generate a retirement plan, they were given an estimate of how much they would need in order to retire. However, only one tester could recall receiving specific guidance as to what immediate steps they could take to begin working towards retirement, such as ways to pay down debt quicker or how much they would need to save. Some testers appreciated the savings plans and how they provided a “wake-up call,” in terms of how much it would really take to meet their retirement and other long-term financial goals. Pefin may be a useful tool for long-term planning, however, testers also need short-term guidance to meet financial goals, like paying down debt.

Among those testers reached through the follow-up interview, 6 out of 9 still found Pefin appealing. However, of the three testers at the three-month follow-up, none reported that they were still using Pefin.

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One Tester’s Experience with Pefin

“Lorenzo” is working to address debt to improve his credit score with help from Bedford Stuyvesant Restoration Corporation. He has student loans, credit card debt and an account in collections. Lorenzo has been working on a repayment strategy for his credit cards. Prior to using Pefin, he used his phone to receive email and text notifications for due dates. He has used financial technology but stopped since his financial situation changed.

Lorenzo had issues with the account linkage process. He was open to linking his credit card and retirement accounts but had to manually input them because of technical issues. He added one of his four credit cards. He chose that one because it has the highest balance, which he is working to lower, with guidance from Restoration. Upon assessing the retirement savings plan feature, Lorenzo said having the visual of the plan gave him peace of mind. However, Lorenzo also said his current financial situation limits the functionality of the feature: “With more money, I could use it [Pefin] more, and it’s hard to make a financial plan when I’m not making anything. Spend more and analyze spending habits. Make more use of that.”

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Findings from a National Survey of Black/African American Community Members with Debt

Survey Background: From December 8, 2019, to January 15, 2020, through Qualtrics, Prosperity Now fielded a national survey to assess the debt situations of Black/African American community members. Within that survey, we assessed awareness, usage and perception of a variety of financial products and services, like financial coaching, debt settlement and the financial advice app.

Key Findings

Familiarity: Financial advice apps are on the radar of a few (17.8%) Black/African American community members with debt.

For comparison, credit counseling was the most familiar product or service for this sample, with 57.5% saying they were familiar, while debt support groups (15.9%) was the least familiar. Financial advice apps were the second least familiar product or service.

Perception: Community members expressed a tentative openness to the idea of a financial advice app; 47% of those aware rated this service as “positive” on a five-point scale, 26% rated it extremely positive, 24% neither positive or negative, one percent negative and one percent extremely negative, indicating that almost half have a positive perception of financial advice apps.

Usage: The majority of Black/African American community members who are familiar with financial advice apps said they have used one but no longer do (47%); 31% said they currently use financial advice apps, and 22% have never used them and are only aware of the name.

Community members have many financial advice apps to choose from. We asked respondents who said they have previously used or are currently using a financial app to share more about the specific tool(s).

Apps Currently Being Used: Respondents currently using financial advice apps mentioned fintech like Mint, Every Dollar and Digit, but also mentioned various bank and financial institution apps like Chase, Wells Fargo and Jackson Hewitt.

Twenty-nine apps were mentioned; the most frequently mentioned was Credit Karma (seven respondents), a tool designed to monitor and provide guidance to increase credit scores.

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Apps Previously Used: Upon examining the apps that respondents have previously used, Credit Karma once again came up as the most frequently used (three respondents), followed by Mint (two respondents) from a total of 14 apps mentioned. A variety of banking and financial service provider apps were also mentioned here (E*trade, Charles Schwab, Fidelity, Wells Fargo and PayPal).

Access: Financial advice apps appear to be somewhat accessible for those who are aware of apps but have never used them, as 42.5% stated that they know how to access them. The most accessible service, according to this group, was online tools and resources (56.3%), while the least accessible was debt support groups (23.4%).

Helpful with managing debt: Lastly, among those who have had experience with financial advice apps, over half (55.8%) stated that apps have been helpful in managing or reducing their debt compared to 68.5% for credit report monitoring (highest rated) and 41.5% for legal aid (lowest rated).

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Insights for Financial Coaching and Counseling Organizations

In their current state, neither Albert nor Pefin offers enough effective debt management features for Prosperity Now to enthusiastically recommend it to coaching or counseling programs. But our testing and feedback for participating staff revealed a few key insights for organizations considering apps for Black/African American clients struggling with debt and past-due bills.

1. Consider the trade-off before devoting time to fintech. As both tools presented some challenges for testers, staff anticipated needing to devote time to learn the tools well and time in sessions to help orient clients. It is not yet clear if devoting time to set up would be worth the missed opportunity to provide direct guidance to clients from staff with expertise.

2. A knowledgeable coach with a debt repayment calculator might be hard to beat. During the time of this exploration, financial coaches at our three partner organizations had been sharing knowledge, tools and resources. One of the tools shared by Restoration staff was the “Debt Calculator,” an Excel spreadsheet that allows coaches to record a client’s active debt accounts, including balances, monthly payments, interest rates and time to pay off.22 While this tool doesn’t meet the criteria of a fintech product, it has been useful for coaches across sites to implement during their sessions as they talk with clients with a goal to manage and reduce debt. As there is not a strong fintech option for debt that is attuned to low- and moderate-income, Black/African Americans’ financial realities, a financial coach or counselor well-versed in debt repayment equipped with this calculator may be the preferable approach for clients needing immediate support with debt or past-due bills. See Addressing Debt in Black Communities: A Comprehensive Report Exploring the Potential and Limitations of Services in the Realm of Financial Coaching for more information.23

3. Make time for the long term when possible. While not the focus of this study, it was worth noting that many low- to moderate-income testers reacted quite positively to Pefin’s offer of planning for retirement but needed help identifying the short- and medium-term steps they could take to make that long-term goal a reality. This may speak to an untapped demand for support with longer-term goals in coaching and counseling.

Staff also mentioned being surprised by the level of detailed information that the tools sought from testers. In addition to data privacy concerns, this can be a challenge when clients lack easy access to

22 “Debt Snowball Calculator,” Vertex42, https://www.vertex42.com/Calculators/debt-reduction-calculator.html 23Prosperity Now (2020). Addressing Debt in Black Communities: A Comprehensive Brief Exploring the Potential and Limitations of Services in the Realm of Financial Coaching. https://prosperitynow.org/sites/default/files/resources/Addressing-Debt-in-the-Black-Community-A- Comprehensive-Report.pdf 27

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their accounts, interest rates and terms on their loans. These tools also need to be more transparent about the value they will provide based on sharing personal data, and that value should be commensurate with the effort required from clients and the coaches supporting them.

Insights for FinTech Developers

In introducing Black/African American community members with debt and past-due bill challenges to two very different fintech tools, a few key insights emerged:

1. There is an unrealized demand for fintech that centers on debt and past-due bill management. While there are many fintechs focused on budget management, savings and credit monitoring, few appeared to offer useful tools squarely focused on debt management or repayment strategies. Addressing debt and past-due bills is a common and important part of reaching other goals, like saving, homeownership or pursuing additional education. If a tool is not attuned to the role of debt, it will fail to account for the fact that income and wealth stripping through disproportionate debt is a major barrier to Black/African Americans’ ability to make ends meet and achieve other important goals. Albert’s repayment calculator is a great start, but we also heard that community members would benefit from additional credible resources for those with debt in collections, student loans and high-interest auto loans put front and center.

2. Providing easier account linking options would make it possible for clients to share the full story of their financial lives and reward them with great content and useful tools for doing so. Black/African American community members are often struggling with debt and past-due bill types that are overlooked by fintech, including debt in collections, overdue utility payments and back taxes. They are also struggling with debt because of wage and wealth gaps, as well as using products, like payday loans and other credit products that target low- and moderate- income Black/African Americans, that are expensive and offered under unfavorable terms and conditions. During a follow-up phone call, one tester put it quite succinctly: “I wish it had more stuff and advice for people like me trying to better my life.” While testers may benefit from the additional insight available by linking accounts or manually entering this kind of information, the reasons to link and the ease of doing so need to be improved. Any efforts by testers to share personal data should be well-rewarded with relevant information, resources and an assurance of protection.

3. When financial tools and services are offered, they should be calibrated to the specific challenges facing a client at each time horizon. While testers were excited about the idea of setting goals and plans through fintech, they often felt at a loss over what to do with the information presented. This challenge was particularly acute for some testers, as they confronted what appeared to be unattainable retirement savings goals based on their financial starting point. Testers were expecting more guidance on how to begin working towards goals -- like reducing debt or saving for emergencies or a home -- than they received.

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Through this exploration to test fintech options for debt and past-due bills with Black/African American clients of financial coaching and counseling organizations, we know there are many hopes for the potential of fintech to support improved financial well-being by addressing debt and past-due bills that have yet to be fully realized. Our search for a fintech that focused on debt and past-due bills unearthed few options. Those tested did not fully meet the expectations or needs of Black/African American community members with debt and past-due bills.

Prosperity Now hopes to share these experiences as a way to continue to advocate that developers engage with community members with debt and past-due bills, especially those with low to moderate incomes, and members of the Black/African American community who are experiencing disproportionate debt, as they design and test their products. Designing products more closely in tune with the structural and economic realities, needs and priorities of community members is how developers can contribute to ensuring that debt doesn’t stand in the way of Black/African American community members achieving their financial goals.

FinTech Providers' Responses

Prosperity Now reached out to Albert and Pefin to share findings from this project. Pefin’s founder and CEO, Ramya Joseph, joined a call with Prosperity Now’s research team to learn more and share updates on how their tool is evolving and to listen to recommendations for how it might better meet the needs of the target audience. She affirmed that our findings aligned with much of their own experience with the platform's benefits and challenges. While low- and moderate-income community members are not their target audience, we discussed potential changes that might improve the platform for all users and open space for new audiences in the future.

Product leadership from Albert also responded but, because of the unfolding COVID-19 pandemic, were unable to connect in advance of this report’s finalization.

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Conclusion

Prosperity Now sought to understand the potential of fintech to complement the work of our financial coaching and counseling partners for Black/African American community members with debt. As we did not find a tool that would fully meet the community criteria, we are unable to recommend fintech as a support for Black/African American financial coaching clients with debt or past-due bills.

We learned more about the current strengths and limitations of fintech to support clients in addressing debt and past-due bills. Reviewing Albert with testers helped us affirm that a tool that builds guidance from the initial steps of tracking income and expenses onward was indeed valuable. Alerts to reoccurring spending were particularly noted as helpful by testers, and there is still promise in the debt features if they can be brought to the forefront of relevant testers’ experience. Pefin helped reveal the trade-offs one can expect if a tool does not require automatic account linkage. Manual data entry needs to be rewarded with insight and strong short-term action items, otherwise it is extractive. Testing Pefin also reinforced that while many community members approach financial coaching and counseling to address immediate issues related to debt and past-due bills, there is also a deep desire to plan for the future (e.g., finding better jobs, homeownership, college savings for children and retirement) that both fintech and coaching programs can support.

Existing tools might be improved, or new tools developed, to better meet community members’ needs and criteria for greater insights, clear repayment approaches and privacy. Much more work is needed to improve fintech by ensuring all relevant debt and past-due bill types are considered and making account linkage easier and either optional or transparent so testers can share their full financial picture and get the best available guidance.

As debt stands in the way of so many financial goals, these features should be front and center whenever possible. And, given the understandable hesitancy of many Black/African American community members to share their personal financial information, there is more work fintech companies must do to earn trust by demonstrating an authentic understanding of individuals' socioeconomic experiences.24 Practitioners, researchers and community members would then be well-positioned to help evaluate these tools to determine if they support clients in achieving their goals.

24 While there is much commonality in the way in which people of different racial and ethnic groups approach revealing information based on sponsorship, relevance, risks and benefits (see the Census Report: Privacy Schemas and Data Collection: An Ethnographic Account), African American and Latino community members report higher rates of being the victims of financial fraud (see Combating Fraud in African American and Latino Communities: The FTC’s Comprehensive Strategic Plan). It should not be surprising that more experiences with fraudulent or high- cost and misleading services would lead to heightened privacy concerns in financial services. 30

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APRIL 2020