Team Pocket Change

Table of Contents
Summary 2

Meet the Team 3

Zachary Alvarado 3
Aubrey Sharman 3
Aaron Sloss 4
Nathan Humphrey 4
Liv Stephens 5
Seán McCarthy 5

Our Problem 6
Our Beneficiaries 6
Our Minimal Viable Product: 7
Limitations to the MVP 9
Research, Processes, & Major Pivots 10
Processes of the MVP 11

Conclusion 12

Acknowledgements Error! Bookmark not defined.

Appendix 13
Appendix A,1 - Minimum Viable Product 13
Appendix A.2 - Backend MVP 14
Appendix B - Previous MVP Iterations 14
Appendix B.1 - Global Fintech Comparison Matrix (Pugh-based) - 10/10 15
Appendix B.2 - FinTech App Decision Matrix - 10/31 15
Appendix B.3 - Initial Criteria Weight Development Matrix - 11/7 16

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Summary
In 2015, a collective 34 percent of American households were considered to have
volatile income (according to the Pew Charitable Trusts). This means that these
households relied completely or partially on alternative financial services outside
traditional banking. Thus, many of these consumers rely on small-dollar loans.
However, with so many available lending options, it can be hard for consumers to find
the best loans for their individual needs. Further, it can be difficult for policy-makers and
regulators to navigate the sea of loan options in order to create the best regulation for
the consumers they are trying to help.

This semester, Team Pocket change worked in collaboration with a group from the
Financial Security Program at The Aspen Institute to create a survey-based research
tool that matches consumers looking for small-dollar loans with options that meet their
needs and preferences while providing financial researchers and regulators with data
about consumer needs. Our team is comprised of five interdisciplinary students from
James Madison University in Virginia, which you can read about in our ‘Meet the Team’
section.

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 Meet the Team

Zachary Alvarado
International Affairs & Spanish
Zachary is from the D.C. suburb of Gainesville,
Virginia and is a double major in International Affairs,
with a concentration in International Relations, and
Spanish. His work experience includes interning for a
local non-profit in Valencia, Spain this past summer,
as well as serving as a student representative for
JMU’s Center for Global Engagement and co-new
member coordinator for his professional foreign
service fraternity. His goal is to pursue a career either
within the U.S. State Department or with a consulting
firm.
Linkedin: https://www.linkedin.com/in/zachary-alvarado-ba8950117/
Email: alvaraza@dukes.jmu.edu

Aubrey Sharman
International Affairs & English Literature
Originally from Fairfax, Virginia, Aubrey is a senior
double majoring in English Literature and International
Affairs with a concentration in Latin American Studies
and a minor in Spanish. This past summer, she
interned with the State Department at the U.S.
Embassy in Buenos Aires, Argentina. She currently
works as a Peer Writing Consultant at the JMU
Writing Center and is the Community Service and
Outreach Coordinator for her professional foreign
service fraternity. Collectively, these experiences
have honed her skills in writing, critical thinking, and communication. Aubrey hopes to
pursue a career as a Political Officer in the U.S. Foreign Service or working for an
international NGO focused on promoting women’s rights in the Americas.
Linkedin:
Email:

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 Aaron Sloss
Engineering
From Warrenton, VA, Aaron is a junior engineering
student at James Madison University (JMU). He has
been working closely with engineering faculty to
study chemical engineering with a special interest in
brewery systems and applications. He has also
worked as a Madison Engineering Research
Assistant for multiple research groups, including the
study of the social and environmental implications of
large energy infrastructure projects, as well as the
study of industrial hemp. Aaron hopes to translate his
knowledge of brewery science and other chemical engineering concepts into the area of
bio-pharmaceutical production and pursue a career in the field.
Linkedin: https://www.linkedin.com/in/aaron-sloss-98957114a/
Email: slossap@dukes.jmu.edu

Nathan Humphrey
Writing, Rhetoric, and Technical Communication &
Public Policy and Administration
Nathan Humphrey is a Senior at James Madison
University and he is double majoring in Writing
Rhetoric and Technical Communication and Public
Policy and Administration. Nathan has experience
interning at a lobbying firm in Richmond Virginia
where he gained experience with grant writing,
publication management and policy analysis. He also
has extensive work experience with customer service
which sharpened his people skills and interpersonal
communication skills. Following his graduation this Spring he hopes to work for a local
government,or possibly another lobbying firm.
Linkedin: https://www.linkedin.com/in/nathan-humphrey-a0bb22b1/
Email: nfhumphrey14@gmail.com

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 Liv Stephens
Communication Studies
Liv is a senior Communication Studies major with
an advocacy concentration and a political science
minor, and plans to attend law school in 2020. She
has worked as a Business Development intern for
Akin Gump Strauss Hauer & Feld, as a Research
intern for Media Matters For America, as a Legal
Assistant at Whittington Law, as an intern at the
Virginia Beach Courthouse, as a Huber Experience
Intern at the Valley AIDS Network, and is currently a
JMU Police Cadet. She is interested in law
enforcement, aviation, pharmaceuticals, insurtech,
medical justice, the First Amendment, mass media, social movements, and
congressional politics.
Linkedin:www.linkedin.com/in/liv-stephens-b3a4b6126
Email: stepheol@dukes.jmu.edu

Seán McCarthy
Writing, Rhetoric & Technical Communication
Seán is an assistant professor in the School of
Writing, Rhetoric and Technical Communication at
James Madison University, and his teaching and
research are situated at the intersection of
community engagement and digital literacy studies.
He is particularly passionate about better
understanding how writing, digital media, and
interdisciplinary collaboration serve to build creative
university-community partnerships.
Seán currently serves as a university
Entrepreneurship Faculty Fellow at JMU, and he
also co-teaches an annual institute for faculty in digital humanities pedagogy. In 2017,
he and collaborator Mollie Godfrey won the award for Best Community-University
Project at the Conference on Community Writing for their work on “Celebrating Simms:
The Story of the Lucy F. Simms School.”

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Our Problem

Our team was initially faced with the challenge of identifying ways in which
Financial Technologies, or FinTech, could be used and regulated to benefit low
and volatile income Americans. After conducting eight weeks of research into
these topics and interviewing a variety of professionals from within the fields of
finance and regulation, we narrowed the scope of our problem to focus on the
field of small-dollar lending. Therefore, our problem evolved into how to
increase both consumer and regulators awareness and understanding of small-
dollar lending options available to consumers with a focus on maximizing
consumer benefits obtained from those services.

Our Beneficiaries

This tool has four beneficiaries: consumers that use small dollar loans,
regulators of small dollar loans,

Consumers
The first beneficiary is consumers, more specifically those who are seeking
small-dollar loans. These consumers are often income-volatile, which comprises
of 34% of the population of the United States. Of these, 20% are underbanked
and an additional 7% are unbanked. Often times consumers are unsure of the
options they may have when seeking loans, particularly small dollar loans.

Regulators
Currently the regulation surrounding small-dollar loan practices and FinTech in
general is confusing and often uncertain. These regulators require more
information regarding these institutions and start-ups, as well as information on
the consumers using these products so that they can thoughtfully create well-
built policy measures to address these practices and consumer needs.

FinTech
Financial Technology, or FinTech is the wild west of technological innovation.
This field is extremely vast, and as a result of Fintech’s sheer vastness, the
average joe has an awful hard time navigating this space. FinTech offers a lot of
promise, but with that promise comes an additional need for thoughtful
regulation, mapping, and organization.

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Institutions
Many lending institutions are seeking customers, this is evident every time you
watch TV and hear those annoying payday lender ads. PayDay lenders,
traditional banking institutions, and FinTech peer to peer lending services have
a need for customers that fit their companies services appropriately. There are
also an incredible amount of options in terms of lending institutions which needs
to be mapped out more effectively as current mapping services have a
commercial prerogative and do not feature small dollar lending services.

Our Minimal Viable Product:

In short, our MVP is a survey-based tool that matches consumers with loan options that meets
their needs and preferences while also providing researchers & regulators with valuable
information of consumer needs. For an in-depth analysis of the workings of our MVP see below:

The final iteration of our minimum viable product (MVP) is a survey-based tool which
operates as a matchmaker for consumers looking for small-dollar loans and lenders,
whether those lenders be online (website or application) or physical “brick and mortar”
lending institution. The tool surveys consumers based on the importance they place on
various criteria related to small-dollar loans, such as the value they place on the
timeliness of the loan, frequency of which they expect to take out small-dollar loans, and
face-to-face interaction. The survey then collects the data on the consumer’s values and
preferences and uses those rankings as weights to calculate what types of lending
services most and least closely align with the consumer’s needs and preferences. The
survey data is imported into a Microsoft Excel workbook, where some basic calculations
are done to determine appropriate weights for the criteria connected to the survey
questions. Example calculations are shown in appendix A.2. Below is a criteria weight
breakdown of an example case:

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Our MVP will benefit consumers looking to obtain small-dollar loans by informing them
of loan provider options alternative to payday lenders which may better suit their
personal needs. It will also give them a stronger understanding of the lending services
available on the market as a whole, so they can make the most informed decision about
where to take out their loan. To do this, criteria weights are used in a decision matrix, or
a table-based tool that multiplies criteria weights to the corresponding scores of multiple
options (lenders in this case) in order to find the best solution; the highest score wins.
Below is an example decision matrix, which pulls example survey data into a decision
matrix using Excel:

In this example, it can be seen that the consumer should opt to use “Example Lender

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3,” since it fits the consumer’s needs the best. The MVP also will provide important
information about the lenders (the top few), as seen in appendix A.1. Further, because
our product is focused on understanding consumer needs and creating
recommendations based on those needs, the survey tool could also serve secondarily
as a tool to increase awareness of consumer needs and available products that fit those
needs among regulators and policy-makers involved in small-dollar lending. This
heightened understanding of these needs and options will allow policy and regulation to
be shaped by benefits to the consumers that are using these small-dollar lending
services in the first place.

Considering that this MVP is Microsoft Excel based, it is easily scalable to levels
appropriate for a specified area (take Harrisonburg, VA for example). However in an
effort to be more encompassing of the needs of consumers, lenders, regulators, and
researchers, it is important that more questions pertinent to consumer needs and loan
selection be developed, as well as questions valuable to regulators and researchers.
Data must be collected on the lending services available to consumers (within a given
radius) for the purposes of scoring. It is also practical to store aggregate consumer data
to better represent consumer needs and habits to researchers and regulators.

Limitations to the MVP

Although we anticipate our tool making some form of an impact on the FinTech/micro-
lending field, there are some significant limitations to this final product that must be
addressed. The first of these limitations is that the specific loan options that it is
designed to designate have not been inserted into its structure. This means that it does
not give recommendations to actual institutions quite yet. In an effort to be more
encompassing of the needs of consumers, lenders, regulators, and researchers, it is
important that more questions pertinent to consumer needs and loan selection be
developed, as well as questions valuable to regulators and researchers. Data must be
collected on the lending services available to consumers (within a given radius) for the
purposes of scoring.

This is because we were unsure of the locality this tool would be implemented in, and
which exact institutions we wanted to include. Not only do we not know where this tool
would be implemented, but we do not know who will implement it. A benefit of this tool is
that many different institutions could find it to be useful, which in turn makes it unclear to
us where this may end up. Another limitation to this tool is that data at times requires
manual entry, although this could be easily adjusted.

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Research, Processes, & Major Pivots

Hacking 4 Diplomacy is an interdisciplinary course offered in collaboration with Stanford

University. Fall 2017 marks the first time Hacking 4 Diplomacy was taught at JMU, as well as
the first time the course was taught exclusively with undergraduate students. In order to take the
course, students applied in the Spring of 2017, and a select group of students from across a
range of majors were accepted.

The course utilizes lean-startup techniques applied to wicked problems. The lean-startup
principles uses constant iterations of a Minimum Viable Product (MVP) which is developed and
improved through feedback testing from industry experts. The first four weeks of the class were
spent developing a knowledge base about lean-startup principles. After four weeks spent
building up our knowledge base, we were introduced to the four problem opportunities and
sponsors, and we ranked our problem preferences. Based on our preferences, schedules, and
areas of study, we were broken up into our teams.

On September 17, 2017, Team Pocket Change was formed consisting of Zac Alvarado, Nathan
Humphreys, Aubrey Sharman, Aaron Sloss, and Liv Stephens. Team Pocket Change was
placed in collaboration with the Financial Security Program from the Aspen Institute and tasked
with finding a way Financial Technologies (FinTech) could be better utilized and regulated in
order to benefit low and volatile income consumers.

Over the next eight weeks, our team conducted an average of six interviews per week with
experts from the fields of finance and financial regulation, and after eight weeks we had
conducted 40 interviews with 34 different people (these interviews have been de-identified for
the sake of privacy). We broke our research subjects into five categories: our sponsor, our
mentor, professors with a research focus in the fields of finance and regulation, professionals
working in the fields of finance and regulation, and other people who do not fit into the
aforementioned categories. Within the category of “professionals”, more specifically, we
interviewed a California State Regulator who helped us see that there may be a knowledge gap
regarding the link between the types of alternative financial services such as FinTechs on the
market and how they could benefit low and volatile income consumers specifically.

Aside from interviewing other people with expertise in the industries of finance and regulation,
we also conducted extensive outside research to help us better understand various facets of the
field and problem we were working on. Early in the process, we conducted cross-national
research to determine examples of global “best practices” for where FinTechs were successfully
being used and regulated outside the United States. This research was inspired by an interview
with one of our sponsors from the FSP who helped us start to understand FinTech regulations
abroad and filled us in on what the regulatory landscape looks like in the United States. Based
on this, he also helped us see what the US regulatory landscape could look like based on

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models from other countries. Expanding on this information, each team member was assigned a
region based on five continents–North America, South America, Europe, Asia, and Africa–and
within each region, we pinpointed specific countries and examined the social, political, and
economic factors that affected the diffusion of and regulatory environment surrounding FinTechs
within the country. This information helped orient us within the field of FinTech and regulation on
a broad scale and allowed us to understand some of the potential assets and barriers for
FinTechs within the United States based on these global comparisons.

Another important point of research focused on understanding the low and volatile income
consumers that our problem was targeted at helping. Through this, we learned that there are
often misconceptions about who these consumers are, with people incorrectly assuming low
and volatile income consumers are irresponsible or incompetent in managing their finances. Our
research indicated that this is not the case, and in fact, the percentage of Americans that qualify
as low or volatile income is much higher than many might initially expect and reaches well into
what would be considered the American middle class. For further reading on this topic, check
out The Financial Diaries by Jonathan Morduch and Rachel Schneider and The Unbanking of
America by Lisa Servon.

A major pivot in our project scope and research came in week four during an interview with our
mentor, Austin Hinkle. During this interview, Austin helped us realize that we needed to narrow
the scope of our problem, and we initially decided to narrow into investigating credit and ways
alternative lending services could help build credit scores. Though this did not remain the final
focus of our project, the shift to credit eventually put us on the path of examining the various
types of small-dollar lending services and the different benefits and pitfalls they each offer
consumers.

Processes of the MVP

Considering the original problem statement handed to us by the Aspen Institute’s FSP, our MVP
has undergone several notable changes (although many aspects remain similar) since the
beginning of the semester. As seen in appendix B.1, the first iteration of our MVP was a
comparison of FinTech usage, on the international scale. This tool used a “Pugh chart,” which
employs essentially the same decision calculations as the final iteration of our MVP, however it
disregards criteria weights. The team was initially looking to research international examples of
financial technology and the corresponding regulation, rank them, and integrate important
aspects of successful financial technology examples into the current frameworks in the United
States. However, as we moved forward through our research, interviews, and contact with
sponsors and mentors, we came to realize that this solution did not meet the scope of this
project.

The second iteration of our MVP (appendix B.2) focused more on the consumer, where we
began to explore the Fintech field, specifically smartphone apps. This was indeed a step in the
right direction, however the criteria were derived from our group, which introduces some bias to

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the tool. In addition, the tool limits the selections to smartphone apps only, which neglects “brick
and mortar” lenders, online lenders (web-based), as well as traditional banks and credit unions.
The final iteration of our MVP has many characteristics derived from this iteration. The third
iteration (appendix B.3) was another pivotal one,and tried to zero-in on criteria weighting.
However, although the data was “better” as it was averaged - more likely to resemble
appropriate weighting - was still bias. Instead, we seeked to allow consumers themselves
decide the weights of decision matrix criteria via surveys, which creates a more personalized
tool, while still providing valuable insight into consumer needs and habits for lenders,
researchers, and regulators, while simultaneously providing consumers a informational tool as
they make tough decisions for seeking small-dollar debt.

Conclusion
The issue of income volatility, and income insecurity at large, is a complex problem facing the
United States, as well as countries abroad. This project seeked to begin to characterize
solutions that can mitigate the adverse effects of income volatility faced by millions of
Americans. Our research ultimately revealed that there was a need for information among our
various beneficiaries regarding ways FinTech could best benefit low and volatile income
consumers. Based on this conclusion, we developed a tool intended to provide relevant
information about this issue to all beneficiary groups: personalized and educated loan
recommendations for consumers and research about consumer needs to regulators, lenders,
and researchers.

Acknowledgements
We would like to thank the Aspen Institute for allowing us to work on such a complex problem.
We would not have been able to make the impacts that we did without the efforts from:

Our sponsors at the Aspen Institute:

● David Mitchell
● Ida Rademacher
● Schan Duff

Our Faculty Advisor:

● Sean McCarthy

Our H4D Faculty:

● Kurt Paterson
● Jennifer PeekesMease
● Bernie Kaussler

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Appendix

Appendix A,1 - Minimum Viable Product

Link to survey: https://eSurv.org?s=MHNNMK_cf918d0d

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Appendix A.2 - Backend MVP

Appendix B - Previous MVP Iterations

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Appendix B.1 - Global Fintech Comparison Matrix (Pugh-based) - 10/10

Appendix B.2 - FinTech App Decision Matrix - 10/31

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Appendix B.3 - Initial Criteria Weight Development Matrix - 11/7

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