In 2015, Elevate and RLJ Financial, will commit to identify the subject(s) and form(s) of financial literacy that most directly and positively impacts the present day financial wellness of sub-prime consumers. We will explore content that focuses on credit, basic budgeting, savings, debt management, and cash flow management using a variety of tools and delivery mechanisms that include electronic lessons, credit calculators, budget worksheets, videos, games, SMS, debt tools, apps, and quizzes.
Over the course of two years, Elevate and RLJ Financial will test financial literacy content with a broad set of consumers using market research and surveys, implement the content identified as most effective with our two U.S. based products, test the identified content using multiple delivery methods to a more narrow set of consumers and measure the impact to those individuals across a wide variety of measurements both quantitative and qualitative including improvements to FICO scores.
Year 1: Create a series of sprints that test content, tools, and delivery mechanisms.
Overview: Establish unique sprints that last 4 weeks (on average) testing approximately 300 consumers per sprint. Using a third-party vendor to test what types of financial wellness content are most effective. We will test a variety of content, tools and delivery channels through multiple sprints to identify what approaches are most effective in impacting financial wellness. Well use a series of quizzes, sentiment surveys, and FICO tracking to test retention and impact.
Third-party customer panel vendor: Manage panel and produce requested data.
Financial services partners: Provide customers to participate.
Financial literacy content partners: Develop content based on established parameters. Different providers will be asked to test different tools and approaches.
Credit bureau: Assist in measuring impact to particular measures such as FICO score, open trade lines, and debt-to-income ratio.
Year 2: Utilize impactful content to identify most effective delivery methods
Overview: The goal will be to identify the method of delivering content that is most effective. Using the subjects and format proven most effective in Year 1, Elevate will implement new content on RISE and Elastic platforms (web site, social media platforms, communications efforts, mobile). Other financial service providers that partnered with the Commitment will also implement new content. For further testing, one test group will receive just-in-time or more aggressive push notifications for Financial Wellness content while another group will receive standard communications.
Goal 1: Verify content provides customer value and meaningfully impacts financial wellness
Goal 2: Determine if usage and benefits increase based on pushed/just in time content
Test group for RISE and Elastic customers
Compare new customers starting at Year 2 mark
Financial services partners: Implement content based on Year 1 results. Provide customer segment for FICO impact testing.
Financial Wellness content partners: Provide content tested in Year 1 and develop expanded content based on successful formats.
Credit Bureau: Assist in measuring impact to FICO, open tradelines and debt to income.
According to the National Bureau of Economics, half of all Americans do not have $2,000 saved for an emergency. That means when someones car breaks down, or a child has to go to the doctor, they are forced to turn to credit to help meet their immediate need. Adding to that - Forty percent of Americans are now considered sub-prime, therefore credit options are most often limited to non-traditional and costly credit sources like payday, pawn, or overdraft. While Americans need continued access to more affordable credit, they also need the tools and resources that can improve their financial wellness over the long term.
The Consumer Financial Protection Bureau (CFPB) defines positive financial wellness as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life.
It is important to note that the CFPBs study showed that the definition of freedom and enjoyment can vary dramatically according to a persons stage in life, prior financial experience, and current household circumstances. We believe that freedom and enjoyment for many Americans includes relief from the daily stress related to living paycheck to paycheck as well as having greater choices in terms of the financial products and the quality of the products available to that individual.
Financial decision making has always been important to the well-being and economic security of individuals and their families. Decision making can be impacted by knowledge, circumstances, and attitudes. Assisting individuals with making better financial decisions has been a goal for many financial services companies, consumer advocacy groups and educational organizations. While there is no lack of financial literacy content, there has been little understanding of its effect on financial decision making.