Over the last two years, digital payment solutions, including peer-to-peer apps, digital wallets, and contactless payment solutions, have grown in popularity and adoption. With 125 million American mobile payment users predicted by 2025, Commonwealth sought to understand the potential for these payment apps as a channel to advance inclusive and equitable financial access.

In our research, Digital Payments and the New Opportunity to Increase Savings, we found that these digital payment solutions have become particularly integrated into the daily financial lives of Americans living on low to moderate incomes (LMI). Additionally, 79% of research participants (and an even higher proportion of Black and Latinx participants) indicated that they would be likely to use a savings product integrated into their digital payment solutions. Our findings are in line with the recent World Bank Global Findex 2021 report which shows that receiving payments into an account is a catalyst for other financial services. Our research also highlighted the business case for product providers – customer acquisition and retention – in a highly competitive environment.

To share learnings and help inform product and solution design, we hosted a webinar moderated by Commonwealth’s Senior Strategy and Innovation Manager, Charvi Gandotra, with Dylani Herath, Vice President of Engineering at Greenwood, and Helen Robb, Director of Product Management at Spruce Money by H&R Block.

Here are three key takeaways from the webinar: 

1. Contactless payment solutions and digital wallets are a high-potential channel for advancing inclusive and equitable finance.

Commonwealth’s research showed that these products have earned customers’ trust and comfort, which are key to encouraging take-up and adoption for communities that have historically been excluded or overlooked by traditional banking institutions.

Helen Robb noted that customer trust in H&R Block has allowed Spruce to reach a significant number of new or first-time savers. Robb noted, “Right now, 19% of Spruce clients said it is their only bank account and for two-thirds of Spruce clients, it is their only saving account.”  

2. There is a strong business case for payments providers to offer savings solutions.

Savings is a highly demanded product feature. Commonwealth’s research found that even in the absence of core product savings features, consumers find ways to use the apps of their choice as savings solutions. Research has also found greater app engagement associated with liquid savings solutions. Robb highlighted that the savings solution offers the “benefit of establishing a longer-term relationship with H&R Block, so there is a bit of a retention and engagement year-round”. 

3. Intentional, user-centered design is key for meeting user needs and driving business value.

The panelists emphasized the importance of designing features and communications to reach their user base. We highlight three concrete examples below. 

• Meeting users where they are
  Dylani Herath discussed how Greenwood’s first partnership was with retail store locations frequented by their customers to enable convenient cash-in and cash-out services for cash-first customers. They also recognized the need for easy and instant access to funds and provided those features—debit cards, mobile check deposits, early access to wages, etc. 
• Identifying creative interventions to encourage savings
  Spruce Money’s cashback savings feature is leading to high overall app engagement. Robb noted that 13% of customers are depositing small amounts through this feature daily. Spruce is also considering prize-linked savings, which Commonwealth research has demonstrated can contribute to higher savings uptake and ongoing behaviors.
• Building trust is crucial
  Herath emphasized the need for strong customer support systems with real people. While this can be resource intensive, it also can generate sustained returns and a loyal customer base. Herath also highlighted the value of tapping into community resources, a core element of Commonwealth’s actionable insights for inclusive design, for wider adoption – Greenwood is “more than a banking application, it is truly a community relationship.” 

Commonwealth is actively seeking partnerships for collaboration to test pilots for savings opportunities across this new channel. To get involved or learn more contact Charvi Gandotra.