How do you create a stronger and more prosperous society where everyone has financial opportunity? We have long believed the answer is more wealth—of opportunity, of tools, and of financial assets. Accordingly, we took a multifaceted approach to the challenge of financial insecurity in 2019—from scaling emergency savings to enabling wealth creation and exploring promising new areas of work. Below we share our highlights from 2019.
Scaling Emergency Savings for Financially Vulnerable People
Commonwealth joined the first phase of the BlackRock Emergency Savings Initiative (ESI), a watershed moment in the movement to address the savings crisis. Trouble dealing with even a modest unexpected expense remains a widespread issue—according to the Federal Reserve, 40% of Americans are unable to come up with $400 in an emergency, and 70% of the lowest income households have no savings at all. We are excited to join fellow industry experts Common Cents Lab and the Financial Health Network, along with a diverse set of major partners including Etsy, UPS, Mastercard, Brightside, Acorns, Arizona State University, and recently announced Uber, to design, test, and pilot actionable savings solutions. Read more about the ESI here.
Expanding the Narrative on Financial Insecurity
What do people living in the US think about financial insecurity? This year we launched a perception survey of 2,000 people across the US to find out. Our early results indicate a widespread belief that financial insecurity is a serious problem. Yet, the majority of people still believe it is largely self-inflicted. We have long resisted the one-dimensional narratives that exist around financial insecurity and our survey provides an important foundation to expand on these narratives. We look forward to sharing a report of our survey and how we plan to make financial security a priority for everyone in early 2020.
Enabling Wealth Creation
Wealth is not achieved through income from work alone, so this year we began to consider more ways to enable wealth creation for millions of people. We have spent the year uncovering new consumer insights and addressing some of the barriers that financially vulnerable people face when it comes to building wealth. For example, many financial products and tools have traditionally focused on middle- to upper-income customers and are not equipped to meet the needs of financially vulnerable people. In a forthcoming report we will share how fintech and the broader financial services industry can engage and better serve financially vulnerable customers through more inclusive investment apps and platforms.
Exploring Emerging Tech
Powerful emerging technologies continue to have the potential to shape the future of people’s financial lives, often in ways that will be with us for decades or longer. At Commonwealth we have begun to explore how these technologies could positively, or potentially negatively, impact financial security. This year, we published Emerging Technology and Financial Security to share our preliminary exploration of how various opportunities and challenges with technologies like blockchain, machine learning, and data science could impact financially vulnerable people. As we mentioned in a blog post earlier this fall, “there is a role for every part of the fintech ecosystem to play in ensuring that consumer financial security is kept front and center.” Our discovery work in this area is ongoing and we plan to publish several more pieces of research on this topic in the new year.
Impact Investing
We may well look back on 2019 as the year that understanding the business and societal value of employee financial security experienced a momentum shift into the mainstream. The Business Roundtable redefined its Statement on the Purpose of a Corporation, signifying a strong shift towards serving all stakeholders. At the same time, this year at Commonwealth we’ve spent a lot of time thinking and writing about ways to improve financial security in the workplace. In a series of blog posts, we explored the significant role investors can play in influencing financial security—from leveraging investors to boost financial security, to the role business executives can play, and how ESG metrics might be leveraged to engage impact investors in financial security. Impact investing can have a much more important role in shaping and influencing financial security in the not too distant future and we are excited to continue to explore this possibility and contribute to this vision in 2020.
Looking to 2020
As always, core to our work in 2019 was the input and observations of the true experts on financial insecurity. This year, we gained insights from thousands of financially vulnerable people, and worked hand-in-hand with large employers, fintechs, financial institutions, nonprofits, and many other organizations as we developed and scaled our most innovative solutions.
We are thankful for the generous support of our funders. Our impact would not be possible without their partnership, collaboration, and recognition that broad financial security and opportunity is both critical and possible.
Thank you for your support in 2019—we look forward to an even more ambitious 2020.