Entrepreneurs bet on the smartphone to solve money problems
By Joseph Pisani | AP
NEW YORK, June 3, 2015 — It can be used to buy lattes, order cabs and get pizza delivered, but some tech entrepreneurs are betting the smartphone can also play an even greater role in saving people money.
An app to help you manage monthly bills, provide a mobile-friendly way to apply for food stamps and a service that helps you build savings automatically were among the creations of 14 startups that pitched their products to executives at JPMorgan Chase’s New York headquarters last month. They were there as part of an initiative, called the Financial Solutions Lab, created by the country’s largest bank and the nonprofit Center for Financial Services Innovation. It’s a $30 million, five-year commitment from Chase and CFSI to back startups that help consumers budget their money.
Both organizations see a need for new tools. About 43 percent of Americans struggle to pay their bills every month, according to a 2014 survey by the Center for Financial Services Innovation. And in a separate study released in May, of 100,000 of its customers, Chase found that many dealt with big swings in income and spending every month.
The startups were selected from 298 applicants, and from those, nine winners will be selected on June 11 based on whether they can grow and help people improve their finances. Winners get $250,000 and access to leaders in the financial services industry who can open doors and provide connections. Chase will naturally be looking for business opportunities of its own, which could mean acquiring a developer of a tool that could serve its customer base. “If we see something exciting, and if we can scale it,” Chase’s head of global philanthropy Dalila Wilson-Scott said, “totally.”
Here’s a look at some of services in development:
ONE-STOP BILL PAYMENTS
Prism aims to simplify the monthly chore of paying bills. Prism users sign in and connect all the companies that regularly send them a bill -- such as cable, phone, credit card or student loan companies. Within the app, users can see all their bills and balance, how much is owed and when the bill is due. Bills can be paid right from the app. The company said it processes $1 million in transactions every day. If it’s selected as a winner, Prism hopes to use connections from the experience to help update its app and offer more services, such as low-cost loans to customers who can’t afford to pay a bill, said CEO and co-founder Tyler Griffin.
TAP FOR FOOD STAMPS
Applying for food stamps means going through pages of paperwork. And the online application doesn’t work well on smartphones, said Jimmy Chen, who founded EasyFoodStamps.com, a colorful website that works on smartphones and simplifies the application process.
But do people who qualify for food stamps have smartphones? “Lots of people ask that question,” said Chen. After coming up with the idea, Chen visited food stamp offices and found that most of the people waiting on line killed time tapping their smartphones. Some don’t apply online because they don’t have access to a computer, said Chen. Fifty percent of workers who earn $30,000 or less a year owned a smartphone last year, and for a portion of those people, the phone was their only way to access the Internet, according to the Pew Research Center. Through a partnership with the city’s food stamp office, EasyFoodStamps.com currently is only used in Philadelphia, but if it is one of the winners, Chen plans to use the connections and money to expand into other cities.
The mobile service Digit makes saving money require zero thought. Digit automatically transfers small amounts from your checking account to a savings account. Users connect their checking account to Digit, and then its algorithm analyzes how much you typically earn and spend. Based on what it finds, it transfers small amounts, usually under $20, into a separate Digit savings account. The company, which launched earlier this year, says it is saving its users $1 million a week. Most of the users are middle-class earners making more than $30,000, says founder Ethan Bloch. With the Financial Solutions Lab, he hopes to bring Digit to low-income earners who don’t have bank accounts and use prepaid cards instead.
Republished with permission of the Associated Press, from Entrepreneurs bet on the smartphone to solve money problems, Joseph Pisani, June 3, 2015; permission conveyed through Copyright Clearance Center, Inc.