Blog Post #3- Finding Where We Can Add Value- Team 5

Finding Where We Can Add Value

Team 5 has talked to many different people about the financial issues that face people in Pittsburgh. We have talked to people who run and use the Banked On program, various bank representative, a representative at the Mayor’s Office, a focus group at The Center for Women in Squirrel Hill and students at the Community College of Allegheny County. We got many conflicting ideas about what can be done and how to best target the highest need population. One lesson learned through these conversations is reaching the people most in need is harder than it seems.

Our conversations did lead to one universally miss understood characteristic of many unbanked individuals, ChexSystems. At first no one on our team had ever heard of it either. Even the name was a fun synonyms conundrum. We assumed that the system, which blacklists those people who overdraw their bank accounts, was called the Check System. However, upon further research we found it was actually called ChexSystems (no relation to the cereal).

Once a person is in ChexSystems, they are basically forced to use an alternative financial system (AFS), like Ace Check Cashing. Those AFS can charge ridicules amounts of interest for loans or just to cash a check. One woman told us she paid over 200% interest on her $1000 loan. Thus, by the end of a year she paid over $3000 for the use of $1000. This negative loop between ChexSystems and AFS seems like one segment of the population that Bank On should target more specifically.

Not all people who are unbaked are in ChexSystems, but how many people in Pittsburgh actually are? Because of the secret nature of ChexSystems and financial data in general, accurate data is hard to find. A report released by the Treasury Department estimates that “nearly 8.3 percent of unbanked households have had problematic banking histories, such as overdrafts or poor credit.” That is the percent nationally that is likely to have been reported to ChexSystems. The unbanked rate in Pittsburgh is 12.7%, the under banked is 23.9%, combined that is 36.6 % of Pittsburgh that struggles with this issue. The population of Pittsburgh is 305,481*.366= 111,806 underbanked people. Using the Treasury Department calculation, I estimate that about 8,945 people in Pittsburgh are in the ChexSystems.

When someone finds themselves in the ChexSystems, either because of carelessness or accident these are the basic steps they need to follow to get out of ChexSystems:

• Order a copy of their ChexSystems report through the ChexSystems website.
• Pay the outstanding debt to the bank
• Contact former bank, ask them to remove you from the system
• Wait 3- 6 months to be removed
• Stay in ChexSystems for up to 5 years even after following steps 1-4

Below is a letter to someone in ChexSystems explaining that they will have to wait to be taken out of ChexSystems:

“This letter is to confirm that ChexSystems has been paid and settled in full. Your Consumer Debt Report will be updated within 30-6- business days.”

While ChexSystems individuals do not make up the entire unbanked population, not targeting them would likely leave out a subset of the population, which needs the most help.

As we finalize our project around these ideas other issues we have come across include:

• Targeting the right population
• Conflicting stakeholder agendas
• Successful marketing and outreach strategies
• Preventing financial issues vs. addressing them after they happen
• Long term or short term strategies
• Follow the Banked on model or address the issue through other channels

Through this project it has become apparent to me that no one solution will address all these issues. However, that brings me to a story that was often told to me when I worked in a school and worried that all the students were not understanding the material.

“A young girl was walking along a beach upon which thousands of starfish had been washed up during a terrible storm. When she came to each starfish, she would pick it up, and throw it back into the ocean. People watched her with amusement.

She had been doing this for some time when a man approached her and said, “Little girl, why are you doing this? Look at this beach! You can’t save all these starfish. You can’t begin to make a difference!”

The girl seemed crushed, suddenly deflated. But after a few moments, she bent down, picked up another starfish, and hurled it as far as she could into the ocean. Then she looked up at the man and replied, “Well, I made a difference to that one!”

The old man looked at the girl inquisitively and thought about what she had done and said. Inspired, he joined the little girl in throwing starfish back into the sea. Soon others joined, and all the starfish were saved.”

— Adapted from The Star Thrower
by Loren C. Eiseley

http://www.cityyear.org/about-us/culture-values/founding-stories/starfish-story

So while we may not be able to address all the sides of the complicated issue of being unbanked, I think our effort will enlighten a few people who can help make a difference.

– Beth Halayko

Team 5

Resources:

1) http://www.treasury.gov/resource-center/financial education/documents/banking%20on%20opportunity%20nov%2011.pdf

2) http://localdata.assetsandopportunity.org/map

Impact Lab #2

Team 5 Mid Term Check In:

This presentation shows the process we have gone through as we continue to examine the issue of unbanked/under banked people in Pittsburgh.

Impact Lab #2

A Journey to Understand Design Thinking and Application – Beth Team 5

Design, especially as it relates to technology, is a new idea to me. I took art classes in high school and my mom is a seamstress, so I am no stranger to thinking about how things look, but never made the connection to design.

This was my senior year prom dress designed my myself and my mom.

Since I started this class I am realizing that I have done design and design thinking and I didn’t even know it. But I still feel overwhelmed by the idea of design sometimes. What if I do something wrong? On Tuesday (10/14), Professor Bruce Hanington, from the School of Design came to our class and talked about the design process. It was so valuable to me to have words and tools to put into actions. He showed us the process that was like this:

Now it started to make sense to me. But still, looking at some of the beautiful things that designers do, it seemed to me overwhelming to access them. But Bruce broke it down even more and gave some examples within each category. One that resonated with me was exploring through an ethnographic or cultural probe. I was shocked because I had actually done something like this before.

During my time at City Year, where I worked at an urban public high school, as a part of training we did an exercise to illustrate our individual experiences with literature and reading. The title of the project was a reading time line, which resulted in a drawing of our experience with books, reading and literature.

It comes out looking something like this (my actual one had a few more stick figure drawing but this can give you an idea).

This project was meant to show the cultural associations we all have with reading and how we each developed our own path through our individual experiences. This started a group discussion about how our students might feel and act towards reading. It was a cultural probe. Now, looking back I see the value of those drawings as a tool. I could develop something similar for the people we meet exploring Bank On and their experience with financial institutions.

Now that I was thinking design, I started seeing it everywhere. I recently started subscribing to WIRED magazine (it seems almost compulsory as a CMU student). It just happened that the October cover of WIRED was the design issue, but the title of the article is actually Wrong Theory: The Power of Imperfection.

This again made me uncomfortable because I don’t like the idea of doing things “wrong”. In the article, Scott Dadich explains from his perspective how the design cycle works. Surprisingly, it was very similar to what Bruce said in his lecture (maybe this is not so surprising to others, but making the connection was new to me). From Dadich’s perspective the design cycle goes something like this:

“In the early stages, practitioners dedicate themselves to inventing and improving the rules—how to craft the most pleasing chord progression, the perfectly proportioned building, the most precisely rendered amalgamation of rhyme and meter. Over time, those rules become laws, and artists and designers dedicate themselves to excelling within these agreed-upon parameters, creating work of unparalleled refinement and sophistication—the Pantheon, the Sistine Chapel, the Goldberg Variations. But once a certain maturity has been reached, someone comes along who decides to take a different route. Instead of trying to create an ever more polished and perfect artifact, this rebel actively seeks out imperfection—sticking a pole in the middle of his painting, intentionally adding grungy feedback to a guitar solo, deliberately photographing unpleasant subjects. Eventually some of these creative breakthroughs end up becoming the foundation of a new set of aesthetic rules, and the cycle begins again.” (WIRED, Oct 2014, page 129)

Both of these cycles give and important message. It’s ok to do things wrong and in Dadich’s Cycle that’s the point sometimes. From Bruce’s perspective, the evaluation process is a key component and doing things wrong can be good, even though it can be uncomfortable. Reading this article and hearing Bruce talk about the design process was really inspiring to me to get out there and explore the world outside my comfort zone. I also realized that design thinking is something I have actually done before, but didn’t realize it.

To Save or Not to Save that is the Question

http://www.fastcompany.com/

Why do some people save money and others don’t? My team is trying to address that question through our project with Save PGH, number 28 on Mayor Peduto’s list of 100 policies to change Pittsburgh. Looking at that list brought to mind a favorite Eleanor Roosevelt quote that says, “You must do the thing you think you cannot do”.

http://personalexcellence.co/quotes/3184

Now, I am not taking on a problem that is quite as menacing as what Eleanor faced in her life, but I think her sentiment is valid. When I think about innovation, it can be scary. The task can seem so large that I feel I cannot do it. Financial decisions are complex, even personal, and often come with a heritage of discriminatory practices. That interconnectedness of this problem can seem pretty daunting to solve. But, thinking about Eleanor’s words gives me fortitude to choose a problem that is really big, even if at the start I don’t always feel like I can do it.

That’s where my team comes in. We have started to break apart the reasons why low-income people tend not to save money. Do they even have a bank account? Well as it turns out, in Pittsburgh 12.8% of people don’t have a bank account, and 23% are underbanked (underbanked is defined by the Assets and Opportunity Local Data Center as a person who has a checking/savings account but has used an alternative financial service in the past 12 months). This means that about a third of Pittsburgh’s population is underserved by the current financial system, and that is not a trivial problem. According to an article by Andrea Levere, President of the Corporation for Enterprise Development “On average, an “unbanked” person spends $1,000 a year on financial services, paying to cash a check or paying high interest on an expensive payday loan, she said.” Our idea is to convert that $1000 a year that people spend to get access to his or her own money, and have them put at least some of it in savings, to create an emergency fund.

Underbanked in Pittsburgh:

http://assetsandopportunity.org/localdata/

Through this project we will continue to break down the reasons why some people have no savings. We have discussed culture, education, intimidation and access as possible reasons why people don’t use traditional financial institutions, and we will continue to conduct research to pinpoint exactly what we think the root of this problem is.

My team has taken time to think about what unique solution will we bring to this issue. I am pretty new at design thinking but the mantra that I kept coming back to when discussing potential solutions was from Tim Brown’s Ted Talk, which stressed a good solution should be at the intersection of desirability, viability and feasibility.

Working with the diverse perspectives of my teammates is helping to make this happen. I have an education and non-profit background, Shawneil has a consultant’s eye, Katie likes to see the big picture and Jenn spots the details we might need. With two Public Policy students and two HCI students our group feels balanced and so far effective at communicating and execution. By the end of this 16-week class maybe we will find this problem is too big to solve by ourselves or maybe our innovation idea can become part of the next step the Mayor wants to take on this project. Either way, we have big plans, and I am excited to see how it all turns out!

-Beth, Team 5

References:

1) http://assetsandopportunity.org/localdata/

2) http://www.nytimes.com/2014/09/17/upshot/nearly-half-of-americans-in-major-cities-are-in-state-of-financial-insecurity.html?referrer=&_r=0&abt=0002&abg=1

3) http://www.ted.com/talks/tim_brown_urges_designers_to_think_big?language=e