Families Rise Out of Poverty With Financial Health Metrics

By Toni Johnson

As the Heron Foundation pursues its mission to help people and communities lift themselves out of poverty, it held a retreat this summer so 13 of its grantees could come together and share their progress.

I sat down with representatives of each to delve into their stories, learning more about how they are using the philanthropic equity provided by Heron to grow their enterprises and ultimately make a greater impact on building a more inclusive and prosperous economy. This is the first of a series of transcripts of those conversations.

Jennifer Tescher is president and CEO of the Center for Financial Services Innovation (CFSI). We discussed  how the financial industry is learning to evaluate its own success by measuring its impacts on consumers' financial health. (The full audio interview is also available for free on iTunes.)

Toni Johnson: Give us a sense of what is CFSI. Why is it important? What work do you do?

Jennifer Tescher: We are the leading experts on consumer financial health, and we lead a network of financial services and technology companies that are committed to building the kinds of high-quality products and practices that will help their customers ultimately achieve financial well-being.

Johnson: CFSI received an Enterprise Capital Grant from Heron, as part of its overall capital raise. What's the money for, and how's it working with the organization?

Tescher: We were so grateful to receive this investment from Heron because we had spent about 10 years building a market in a field that hadn't existed before. And we felt like we were poised to really grow our impact, to scale it. But to do that we needed to reorganize and repackage both the value we were providing into the market and the way we were organized internally to deliver it.

So, we were reorganizing ourselves into a membership network and needed to build the kind of sales and relationship management staff, the kind of technology and CRM infrastructure that was needed to do that. And, simultaneously, we also wanted to start growing and scaling an existing consulting businesses that we expected would grow, in part, as our network grew. We needed to hire more consultants; we needed to template-ize and product-ize some of our offerings. So, the investment from Heron and others has been really critical, and we're really excited because we're starting to see some success.

Johnson: From our point of view, financial services is still a critical piece to helping people and communities lift themselves out of poverty. Can you talk a little bit about the impact that CFSI is having, particularly on low-income people and communities?

Tescher: We're really trying to communicate a pretty big idea to the financial services industry: that they should be building businesses that make money because and when their customers succeed. Not in spite of their customers -- which is what we saw, frankly, in the build-up to the financial crisis.

We are trying to make the case that they should see themselves as being in the financial health business. And that they should be making sure that the products and services they offer and the policies and practices behind them are actually moving the needle, that they are being helpful or, at the worst case, neutral. But in order to do that, we've got to start measuring because you tend to manage what you measure.

Our theory is that by growing our network, that enables us to reach ultimately more Americans and more low and moderate income families. The more we reach into those markets and we engage with them more deeply, the more new products and strategies are built and delivered. And ultimately, the more we get our network to drink the Kool-Aid, the more likely they are to start actually measuring their own success in impacting their customers' financial health.

Our network, as an example, has just in the last 18 months doubled in size. We now have about 110 companies and organizations. Just to put that into perspective: They touch, we estimate, 174 million consumers, 43 million of whom are low and moderate income. So, if we grew our network not another iota, we are already working with firms that are reaching a massive number of the people that we care about. Just in the last year and a half as an example, we have seen and worked with companies to create at least a dozen new products or strategies or changes to practice that are high quality and that we think are going to move the needle.

And most excitingly, just earlier this year we launched a set of financial health indicators. How do I know if someone is financially healthy? And we just announced a beta test with a group of about 8 providers of varying sizes and types, who over the next six months are going to be analyzing their own customer data and some cases gathering some survey data, so that they for the first time can actually measure the financial health of their customers and then reflect on their products and services and what they might need to change in order to help their customers improve. So we're really excited that were on the way to our 2018 goal of having at least 25 percent of our network investing in and measuring the financial health of their customers.

Johnson: So you said network. Can you just give our listeners a sense of what these companies look like? Can you just name a few and what do they do?

Tescher: It's a very broad array, so we have some of the biggest banks in America such as Bank of America, Chase, Wells, Citi and others, regional and super regional banks. We have a number of credit unions; we have technology companies that are vendors to providers. So we have Visa and MasterCard; we have American Express; we have the big credit bureaus; we have the big technology vendors that service these companies.

Then we have an array of earlier-stage, technology-driven companies that are trying to enter this market. We have retailers who see themselves as delivering financial products and services; we have some nonprofits who see themselves as being in the business of delivering. It is an incredibly broad array of providers who feel committed to this bigger idea, [and] that frankly is bigger than any one of those companies.

Johnson: Is there a story that can sort of anchor what this looks like for a person or community on the ground?

Tescher: About a year ago, we met and recruited a new company to our network, Wright-Patt Credit Union. They are the largest credit union in the state of Ohio. They have 300,000 members and about $3.3 billion in assets -- not the largest company we work with, but absolutely not the smallest. And they came to us and got excited about our network because this concept of financial health really resonated with them and it was similar to something they were trying to pursue but hadn't been able to put their fingers on it yet.

As they got to know us and understand more about our thinking and our framework, they hired us through our consulting practice to come and survey their customers using our financial health survey instrument, to really do a financial health checkup and to really understand how their customers are faring and to segment them. They also hired us to review almost every product in their suite, whether it's checking accounts or loans or savings products, to assess how well they are designed and offered, from the perspective of what the needs of their customers are. And really even more revolutionary, they've then asked us to do the same survey for their 700 employees because they understood that you have to put your own oxygen mask on first.

If we want employees of financial institutions to be successful in working with customers, especially those who are struggling, it's kind of hard to do that if you're struggling in the same way and don't have the resources -- whether those are tools or products or advice -- to be able to make their own improvements. And so we are incredibly excited that our network members aren't just buying into this thinking; they are helping us actually advance the practice. And now, a bunch of other credit unions that they are in a relationship with are asking us to do the same thing, and we're now starting to talk to employers outside of financial services about the financial health of their employees.

And so, what's so powerful -- as we think about this network -- is really the network effect. It's not just the one-to-one interactions that we have with any given company, but it's the interactions that those companies have amongst themselves in building a movement, building best practice, and ultimately demonstrating that financial services can really be a force for good in people's lives, especially for those who are struggling.

Image credit: Pixabay

Toni Johnson is vice president of knowledge and influence for the Heron Foundation whose mission is to help people and communities help themselves out of poverty.