Non-profit Commonwealth begins second phase of partnership with JP Morgan Chase

In late January 2023, Boston-based non-profit Commonwealth announced the second phase of its project to “address the challenges and opportunities that emerging technologies [in fintech] present” for workers earning low-to-moderate income in the US, particularly “Black, Latinx, and women-led households” in this income bracket.

Commonwealth and JP Morgan Chase are examining how new tech can reduce wealth inequality in the US

The project has been operated in collaboration with JP Morgan Chase. Commonwealth has a close relationship with the largest bank in the United States, to the point that a member of the JP Morgan Wealth Management leadership team, Dr Kelli Keough, joined the non-profit’s board of directors in 2021.

The first phase of this project, launched in August 2020, focused heavily on creating tools and assets to help fintech firms and social impact entities learn how “to harness the power of emerging technologies like big data analytics and artificial intelligence in a way that addresses the needs of financially vulnerable Americans”. The second phase of the project hopes to “advance the strategic vision for, and shape the ongoing public conversation about, the impact of emerging technologies in the financial services industry”.

Formerly known as the Doorway to Dreams Fund (or D2D Fund), Commonwealth was founded at the turn of the millennium by Harvard Business School professor Peter Tufano and former HR executive Timothy Flacke. The organisation’s foundational goal is a simple one: take the sort of financial innovation techniques used to generate new products and wealth for the rich and direct them toward moderate and low-income households.

The firm boasts an impressive array of experts in both economics and non-profits at its highest levels. Bank executives like Capital One’s president of retail bank Celia Edwards Karam, non-profit leaders like JUST Community co-founder Haydeé Moreno, and former IRS commissioner Fred Goldberg are some of the names listed on the company’s board of directors.

The work Commonwealth does primarily focuses on raising awareness about the ways fintech can be used to benefit low and moderate-income households. They also conduct research and pilot studies, such as 2019’s Workers Strength Fund project.

A collaboration with The Workers Lab, the Workers Strength Fund allowed certain gig workers in four major American cities to apply for emergency fund grants of up to $1,000. To accomplish this, Commonwealth created a website where these workers could go through the application process and explain why they needed the funds. If the application was approved, they would receive the funds within two business days. 7,000 workers were contacted but only 350 went through the full process and received emergency funds.

However, Commonwealth’s proverbial golden goose as of late has been conversational AI and its use cases in fintech, primarily as customer support. From chatbots to virtual assistants, Commonwealth believes these technologies can be a big help to households with low-to-moderate income.

In an interview with FinTech Futures, Commonwealth co-founder and executive director Timothy Flacke elaborated on the benefits conversational AI can have for these households: “There are a couple things that come to mind and that we’ve seen in our research. One is that, for most of us, personal finance topics are not a comfortable place at baseline, but it certainly stands to reason that the more that your financial life is a source of stress or… a source of pain, it’s even less likely that you’re comfortable talking about it, reaching out for help, asking questions where you might reveal that you only understand a piece of it… and so, that’s where having the ability to interact with technology instead of a human being may have some advantages.”

Commonwealth co-founder and executive director Timothy Flacke. Image source: Commonwealth

Flacke goes on to reference his organisation’s findings from the first phase of their project with JP Morgan Chase: “One of the things we found in this first phase of research was that use of chatbots, a very common form of conversational AI, by people living on a low or moderate income actually increased dramatically throughout the [Covid-19] pandemic.”

When asked to clarify the use cases of these chatbots, Flacke says, “My memory, and I can confirm this, is… it probably is as specific as the use of chatbots in the context of financial services.”

On top of that, Flacke believes this adoption of chatbots is not a temporary one: “The majority of folks that we interviewed or spoke to or surveyed said that they would continue using the banking practices they adopted during the pandemic, even after branches reopened.”

The rise in chatbot use makes sense with other trends surrounding the technology. Research and Markets found that the global chatbot market was valued at $3.7 billion in 2021 and expects it to reach $13.9 billion by 2027.

Chatbots as tools for social goods, such as reducing wealth inequality, also have some precedent. Throughout the Covid-19 pandemic, the World Health Organization (WHO), Center for Disease Control (CDC), and governments worldwide implemented chatbots on various websites to provide citizens with up-to-date information on the spread of the disease and its symptoms.

Flacke goes on to state that people “who have experienced financial hardship were more likely to have used chatbots and conversational AI, and I interpret that as evidence of the point I made a moment ago: that when you’re experiencing stressful financial times… having the ability to talk, in addition [to human customer support], with an automated system when things are really bad seems to hold some real appeal”.

Despite this, however, even Commonwealth’s own website notes, “Our research indicates that when given a choice between a human and a chatbot, there is a strong preference for human assistance.”

When asked about this quote, Flacke responds, “You’re right. I mean, we did say 87% of folks when given a choice, they would prefer a human. You know, I think that speaks to a couple of things. One: that we don’t necessarily want to have only one choice or that the right choice is the same in every circumstance. And two: that it is a changing landscape.”

Moreover, while Commonwealth’s research, according to Flacke, reported a dramatic increase in chatbot usage by individuals with low or moderate incomes, the increase could just as easily be due to companies routing customers away from human customer support representatives and toward chatbots without giving said customers a choice in the matter.

When this alternate interpretation of Commonwealth’s research was brought up, Flacke replies, “The most direct answer [to if this alternate interpretation is viable] is: ‘I don’t know.’ … I think when you see a doubling of use in a short time period, my assumption is that… it’s less likely to be a supply-side change. For example, it’s hard to imagine that, in the space of a couple of months… industry-wide, there would have been such a quick shift.”

Whether conversational AI or any of the other technologies Commonwealth is championing is an answer to the problems it seeks to solve remains to be seen, but Flacke strongly believes in his organisation’s vision to “make wealth possible for all”.