How saving is changing
The basic components of matched savings programs have remained relatively unchanged since their inception but some innovation has occurred.
Innovations have been mostly driven by advances in technology and incorporating the principles of behavioural economics to better meet the needs of participants.
Many efforts in the US and Canada have been devoted to making programs scalable. Matched savings programs are inherently costly to run as they require significant resources to implement and maintain.
The aim of scalability is to retain the quality of outcomes while reducing costs to administer the program and extending its reach.
In the US, certain legislation has led to the proliferation of small programs run by small community organisations, leading to a large number of programs facing significant costs for a small number of participants - making it more difficult for the programs to be sustainable.
There is much to be said for the Saver Plus model where investment is targeted towards one program rather than many smaller programs.
In recent years, a popular innovation showing positive results has been the integration of matched savings programs into frontline services such as housing and employment.
Integrated matched savings programs when combined with life events or other needs, harness the potential of ‘teachable moments’. The MyPath Savings Initiative in San Francisco has integrated a savings program into an existing youth development and employment program.
Under the scheme, young people receiving their first pay directed a portion into a savings account. Results showed increases to participants’ financial knowledge, financial self-efficacy and other positive behaviour.
Ongoing advances in financial technology are being harnessed within the matched-savings fields, with the development of mobile applications and online platforms to improve efficiencies in delivering matched savings programs and the experiences of participants.
The Boston Federal Reserve has introduced an app into its matched savings programs, which provides individuals with secure and real time updates and information of their saving progress, customised updates and reminders based on their savings behaviours.
The app provides targeted assistance to individuals to stay on track and keep on top of their savings.