'We're At A Tipping Point': Commonwealth Drives Systemic Change In Financial Services Alongside JPMorgan, BlackRock

Commonwealth, a financial security nonprofit, recently announced a two-year initiative to address challenges and opportunities emerging technologies present to people of lower- and moderate-income.

As part of the development, Benzinga chatted with Commonwealth co-founder and executive director Tim Flacke.

About Commonwealth

Founded in 2001, Commonwealth is working to establish systemic change in the economy.

Alongside institutions such as JPMorgan Chase & Co JPM and the Consumer Financial Protection Bureau (CFPB), Commonwealth recognizes economic challenges and leverages innovation to design products and services that support financial security and opportunity for all.

In the simplest way possible: Commonwealth’s actionable insights inform and influence fintech innovation.

“We’re proudly a non-profit, mission-driven organization,” said Flacke. “What’s the mission? For us, it’s financial security and opportunity for the half of the country that struggles to have that.”

Value Proposition

Commonwealth, while operating on the premise that people should have the resources necessary to survive and make society more productive, looks at different ways to increase accessibility to sustainable finance solutions.

The organization is most involved in the innovation and influencer work perspectives of finance.

“On the innovation side, ... that means design work, and getting out in the real world to test stuff,” he said.

“The second half is influencer work. You know, we realized that with an enormous problem, there is a limit to what anyone one actor can do. For us, as a relatively small actor against a huge problem, we’re out there trying to get market actors and sometimes policy makers to take ideas that we know have worked for families, and adopt, use, and build them into their work.”

Consumer Focused Initiatives

Much of Commonwealth’s recent initiatives have been concerned with savings.

Pre-pandemic, four out of 10 American adults were having difficulty covering at least $400 worth of unexpected expenses. Since the nationwide lockdowns caused the loss of work for millions, economic inequality has risen even further.

“We know from experience that having a little bit of liquid savings is like the Swiss Army knife of personal finance. It can solve so many things, especially the ups and downs of volatile income and expenses.”

More specifically, Flacke said Commonwealth amped up its efforts around short-term savings offered through codified retirement infrastructures; “If we could offer high-quality emergency, liquid savings through the retirement system, that would really open up that ability to build that Swiss Army Knife that many households need," he said.

The organization has worked alongside the BlackRock Inc BLK Emergency Savings Initiative and Consumer Financial Protection Bureau (CFPB) to develop resources and guidance on auto enrolling workers into emergency savings.

“Ultimately, it’s an employer decision," said Flacke. "But, for many employers, it’s as much a decision for the providers that serve tham. They’re only going to do something if there’s a vendor that’s figured out how to do it and made it easy for them to do so.”

Commonwealth also teamed up with JPMorgan Chase to expand on the increased efficiency and reduced costs offered by fintech. The program will address increased fractures in the financial system exacerbated by the COVID-19 pandemic.

“We all accept that artificial intelligence and machine learning is revolutionizing the world that we live in,” Flacke said in a conversation regarding democratized fintech solutions. “Those types of technologies are often not conceived, designed, and built out with lower- or moderate-income users in mind. It’s just not the way our economy often works.”

Innovation Outlook

Through the lens of fintech advances, as well as individualized financial support, Flacke said Commonwealth’s recent initiatives will provide consumers a stepping stone to build financially healthy lives.

“There’s increasing evidence that if workers are less stressed about their short-term finance, they are able to be more productive. They are able to be present, not absent from the workplace," he said.

“We think there’s an opportunity to take some of the advances in fintech around wealth and repurpose them and extend them in a way that can work for different audiences.”

Going forward, Commonwealth aims to drive further systemic change within finance, through quality insights and partnerships.

“This feels like we’re at a tipping point where people are saying we can’t rely on just people making different choices individually. We need to thing about these really big issues in a more systemic way.”