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…INVESTMENTS NEEDED TO REALIZE THE POTENTIAL OF DIGITAL FINANCIAL SERVICES TO INCREASE FINANCIAL INCLUSION

August 2017
Lucy Gorham & Jess Dorrance

According to a recent census, the field of financial coaching includes over 450 programs providing coaching services across the U.S.97 One of these is Catalyst Miami, which offers a range of services, including financial coaching, to improve the financial and physical health of families and communities in Miami-Dade County in Florida. A key part of their mission is to build the financial well-being of households and communities by offering services such as free tax preparation, credit building and saving opportunities, and comprehensive financial coaching.

Financial coaching assists individuals to achieve improved financial security and well-being. Although various definitions of financial coaching exist, it is typically understood to incorporate a few key elements. These include identifying a financial goal, developing an action plan to achieve it, and following through on that plan.98 All of this is done with
the assistance of a coach to guide and support each stage of the process. Coaching is distinguished from financial counseling, another approach to enhance financial security, by being primarily client-driven rather than prescriptive, and working towards a goal rather than addressing a more immediate financial crisis.99

Over the last decade, financial coaching has evolved from a fledgling approach to a professionalized field.100 A recent element in this evolution is the inclusion of technology into the delivery of coaching services. There are multiple ways technology can enhance financial coaching – from virtual meetings (through Skype or Google Hangouts, for example) to text messaging used for appointment reminders or informal communication between coach and client to online platforms to deliver coaching content and resources.101 At Catalyst, coaches have begun to use fintech apps to enhance their coaching sessions and increase engagement with clients as they work towards their financial goals. Catalyst recognized that traditional banks were not necessarily meeting their clients’ needs and felt they had an opportunity. Catalyst’s Chief Executive Officer, Gretchen Beesing, stated, “…traditional banking does not meet all of the needs of our client base, so here’s an opportunity to test new things, see how it can enhance our coaching model. And our coaching team was eager to incorporate fintech apps, they loved it, started playing with the apps right away when they became available, and so we went from there.”

Catalyst Miami approaches its work with innovation and experimentation in mind. Additionally, they have an office co-located at Miami-Dade Community College and a large number of their clients are young and tech-savvy. These two pieces together made the incorporation of technology into their services fairly smooth and felt like a logical extension of their mission.

Along the path to integrating fintech tools into their services, Catalyst has discovered some important lessons that include the following:

“For me and for our coaches, we tend not to do it [introduce an app] at the beginning of the session, only because that’s most of the relationship building. It’s that building trust part of it. You’re really just hearing people’s stories, and active listening, and that’s where you build the trust, and you don’t want to seem like you’re selling something when you’re presenting a valuable tool.”

 

97 This number reflects the number of responses to the census. There are likely more organizations offering coaching services that did not participate in the census. Lienhardt, Hallie. Financial Coaching Census 2016. Asset Funders Network and Center for Financial Security. Accessed online: http://assetfunders.org/ages/pages/AFN_Financial_Census_Brief_2016.pdf
98 Collins, J. Michael, & O’Rourke, Collin. The Application of Coaching Techniques to Financial Issues. Journal of Financial Therapy, 3 (2) 3. Accessed online: https://doi.org/10.4148/jft.v3i2.1659
99 Ibid.
100 The Cities for Financial Empowerment Fund. The Professionalizing Field of Financial Counseling and Coaching: A Journal of Essays from Expert Perspectives in the Field. http://www.professionalfincounselingjournal.org/assets/cfe-fund-professionalizing-field-of-financial-counseling-and-coaching-journal2.pdf
101 Collins, J. Michael., & Lienhardt, Hallie. Using Technology in Financial Coaching. Center for Financial Security. Issue Brief 2014‐6.1 Accessed online: http://fyi. uwex.edu/financialcoaching/files/2014/06/tehnology-in-coaching_6_20141.pdf.

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This article is an excerpt from the UNC Center for Community Capital report Catalyzing Inclusion: Financial Technology & The Underserved.