Piggybank Project

Inspiration 36 million American consumers have the lowest FICO score (300-579), and another 45 million are living without credit scores. (Holland)

A survey from a loan comparison found that individuals who took out an auto loan of $25,346 with a “fair” credit score could pay up to $7,471 more interest than a person with a “very good” credit score taking out the same loan. (Lexington Law)

Credit scores and income are highly correlated: having a high salary doesn’t guarantee a higher line of credit but you’re more likely to have a higher capacity and lower credit risk.

I had the opportunity to learn about this during my internship at a private banking firm. I worked in capital placement and witnessed how so many people were getting denied loans they really needed to get their businesses started because of a low credit score that they had no idea how to fix. It seems that the FICO system, which was built to be more financially inclusive, is no longer so -- instead, it denies and discriminates against inherently poorer people and acts as a barrier to their ability to earn.

What it does The Piggybank Program is a community-based system that simulates a bank account to incentivize saving and build good financial management habits.

Step 1: After a financial literacy course, a group of people individually Invest equal amounts of money on a biweekly or monthly basis into the piggybank “savings”

Step 2: Periodically taking loans (max 5% of savings) from the piggybank only when needed

Step 3: Step 1 and Step 2 are repeated over the course of a year. During this period, the money that has not be taken out accumulates 2% interest.

Step 4: Accumulated savings + profits divided among members proportionate to their savings using an algorithm detailed in the Pitch Deck

Desirability. Why is this the ideal solution? Profit Incentive More than 50% of U.S. households have an investment in the stock market. (Pewresearch) Why? Because of its potential to build wealth over time. But here, the Piggybank Program’s interest rates are guaranteed.

Community The Michigan State University found that exercise times significantly increase when it was done with a partner, and can improve intensity by 200x (AARP). Just like exercising, the Piggybank Program uses a community for motivation, keeping each other accountable, and learning financial literacy

End Goal 43% of people expect to give up on their dreams, but this percentage significantly decreases when they set an end goal in mind (Sundried). In the Piggybank Program is just the first step to financial inclusion and the end goal is to increase credit scores. By knowing this, people are more likely to keep an open mind and absorb information because they know it will benefit them long term.

Feasibility This project takes 0$ To gain members and establish a program, is highly replicable, and does not require much infrastructure to get started. As a result, it will easily be able to make a return on investment and will function efficiently, creating a large impact at a low cost.

Viability When people invest money into the Piggybank, we will be able to provide a form of direct oversight, allowing us to grow our savings and later give returns. Extra profit will be used to grow the Piggybank Programs and expand to more key areas in the United States.

Impact Analysis Use Hyperlokal Kapital, who used a similar concept to test their idea in Asia, as a case study. As a result, their findings can be used to validate our product. Hyperlokal Kapital was able to

Double their membership Generate PHP 143,000 in savings Acquire PHP 48,000 in loan profits Receive PHP 9000 in social fund contributions

Suggesting that it is successful model

How we built it I have entered the Youth Hack category which does not require it to be built. The deck was made using slides.

What's next for the Piggybank Project Since the Piggybank Project is still in the pre-seed stage, we are looking for monetary support to develop our product. The Hack to the Future 4 prize would go towards creating prototypes and testing to validate our business model. Donations from benefactors or organizations will play the same role.

Built With

• slides