Whether you’re writing a check to your landlord, swiping your credit card at the checkout counter, or diverting a portion of your paycheck into a 401(k), it’s likely that a financial institution plays an important role in your daily life. Yet the same cannot be said for all Americans: more than one in four households (28.3%) is either unbanked or underbanked by traditional banking institutions (See 2011 FDIC National Survey of Unbanked and Underbanked Households). Instead, these consumers rely on alternative methods for everyday financial services—check cashers, money orders, payday loans, and the like—which often levy significantly higher fees or interest rates than those offered by most banks or credit unions. Unfortunately, this means those who have the least are often forced to pay the most.

There is no shortage of ideas for how to help low- and moderate-income (LMI) consumers access affordable financial services in the United States. Unfortunately, few of these ideas have been successfully implemented at a scale sufficient to make a real dent in the problem.

In a new ideas42 white paper, we unpack the challenge of scaling financial products for LMI consumers. The paper draws on interviews with more than twenty leaders in the financial services industry, as well as a review of the latest literature, to suggest four clear pathways to take solutions all the way from idea to widely available product. It then flags the difficulties built into each pathway, and recommends a series of best practices for innovators and regulators seeking to bring more socially beneficial financial products to scale.

Using insights from behavioral science, we emphasize the importance of designing a product or service with a user’s predictable behaviors in mind. Too often, designers work from an idealized version of human decision-making and are surprised when consumers do not use a product as expected. Designing a product that fails to take real human behavior into account can cripple an otherwise promising innovation. For instance, a consumer living paycheck-to-paycheck may have a hard time using a traditional bank account when it can take a day for funds from a check to clear. These hassle factors–the seemingly small costs or inconveniences that might at first glance appear unimportant–can actually have an outsized impact on consumers’ actions. Reducing these kinds of hassles can have a significant effect on uptake and regular usage of mainstream financial products.

This paper represents an important step toward alignment of consumer and financial provider needs and, ultimately, increased opportunities for unbanked and underbanked Americans to access affordable services and achieve their financial goals.

The research that led to this white paper was generously supported by a Ford Foundation grant. In the coming year, ideas42 will continue to find opportunities to identify and test product models that facilitate positive financial behaviors for consumers while offering providers sufficiently attractive financial return to implement and scale.

This white paper is part of our ongoing work to bring behaviorally-informed solutions to the financial inclusion space. Click here for a look at some of our other work aimed at increasing access to financial services for LMI consumers.