I’m reminded on lazy, hot summer days of the hours I spent as a child entertaining myself outdoors with adventures and discoveries.  Day dreaming was an acceptable pastime along with the challenges of finding something to do that didn’t involve someone else finding it for you.  It comes as a shock, though, when I watch my teenage children glued indoors to technology on beautiful sunshiny days.  I find myself asking where the simple pleasures of imagination have gone.

In the world of financial services technology, imagination – much the opposite of my wonderful Gen Y kids, is bursting with the type of energy that kept me and my friends out all day until the mosquitoes started biting.

New innovations in e-commerce, online payments, mobile payments and online lifestyle services are sprouting faster and more furiously than weeds on a summer lawn.  Who benefits from this new breed of discovery?  All of us, but none as much as the financially underserved segment of our population who live outside what was once defined as the ‘financial mainstream’ and can now only be regarded as a ‘new normal’ for America’s fast growing, financially insecure middle class.  These are modest-to-healthy wage earners with 50 percent living paycheck-to-paycheck to make ends meet.

The phrase “it’s expensive to be poor” was purportedly coined by none other than American Express, the leader in exclusive financial services for the financially elite.  But Amex and their brethren in financial services, like MasterCard and J.P, Morgan Chase, are dedicating major resources to uncover innovative new ways to change the paradigm in how middle class Americans keep their financial house in order.

What does that mean for the store manager who earns $42,000 and has $8,000 in debt?  Or how about the college grad who landed her first job in the advertising agency of her dreams with a salary of $34,000 and a student debt nightmare in excess of $70,000?  Or how about the young entrepreneur who maxed out on all his low balance/high interest rate credit cards only to find himself out of a job when his big idea went bust?  These are today’s consumers who typically turn away from brick and mortar banks with fees that lead them to occupy the national attention when they opposed the inequities of financial services.  These are today’s consumers most in need of finding new ways of doing things that don’t involve someone else telling them what to do.

What does this all mean for the collective imagination of today’s service providers?

It means that plight of the middle class is becoming a national economic reality. It means that free market solutions are needed to remove the friction in access and affordability of essential services.  It means that imagination and innovation will keep a lot people playing outside the box to watch out for the needs of the largest segment of our economy and the most in need.

It means that change is coming…and none too soon. 

Turning your paycheck into cash at a local check cashing service can cost as much as 2 percent; that’s $2 for every $100 dollars earned, but doesn’t capture fully the cost in terms of time spent cashing checks or paying bills in person.  Research done by the Brooking Institute estimates the total costs come closer to 5% of income of being unbanked.  Estimates for operating on the fringe of the financial mainstream total thousands of dollars over a lifetime, or over one year’s adult wages for a whole lot of people… just to be able to access their wages.  That’s a pain point the big financial giants are looking to address, and a place where really smart and nimble imaginations are bringing practical and affordable financial tools to make day-to-day living more about living and less about struggling to get by.

Examples of products and services that have harnessed imagination for good include the following;

Prepaid Cards -- The plethora of options require the buyer to shop around for lowest fees / highest value instruments, while providing instant access to virtual banking and the ability to participate in the brave new world of e-commerce and bill pay. 

Micro Loans – Growing numbers of service providers are looking for ways to make small dollar loans locally, where funds are most needed and big banks have left communities high and dry.  The result is access to money when consumers need it without putting them into a cycle of re-payment that makes it impossible to get ahead.

Payroll-Based Services -- Linked to essential needs like housing and utilities, services like rent from payroll now make it possible for consumers to earn sizable discounts by agreeing to automatically segregate funds from every paycheck so that key debtors (e.g. landlords, utility providers) are paid first before money can be used on other essential expenses.

Credit Building Services – For an estimated 50 million Americans, building and maintaining a positive credit score is an allusive task.  Many people never knew they needed a credit score, often assuming that paying their bills in cash made more sense.  Many more people have seen their credit hurt, making it increasingly more difficult to function financially. New scoring systems that take into account recurring payments like rent and cable are fast becoming central players in helping the financially insecure get credit for positive payment practices.

Does this growing list of options point to a rebirth of imagination for your co-workers, your neighbors, the guy who pumps your gas, and the girl who pours your coffee?   The answer is yes, as the financial services industry undergoes a rebirth of imaginative ways to remove pain from payments, increase access to credit, and improve the ways in which America’s middle class can stretch a paycheck far enough to cover expenses until the next one comes in.  Change may not come before summer breezes turn to chilly October nights, but certainly before my Generation Y kids realize all they’ve been missing by keeping their imaginations indoors.