Introduction to CFSI and Financial Health · The Center for Financial Services Innovation is an...
Transcript of Introduction to CFSI and Financial Health · The Center for Financial Services Innovation is an...
MEMBERSHIP | CONSULTING | RESEARCH | INNOVATION
Leading the Nation in Consumer Financial Health
Introduction to CFSI and Financial HealthOctober 2018
©2016 Center for Financial Services Innovation. All rights reserved
About CFSI
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The Center for Financial Services Innovation is an authority on consumer financial health, leading a network of financial services innovators committed to building better consumer products and practices.
InformWe provide deep consumer insights and industry research.
InnovateWe seed and test promising new ideas.
AdviseWe offer consulting services to both
for-profit and nonprofit providers.
ConnectWe foster dialogue and collaboration through CFSI events and networking opportunities.
CFSI
What is financial health and how financially healthy are people in the United States?
©2016 Center for Financial Services Innovation. All rights reserved
Financial Health
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Day-to-DayManagement Resilience Opportunity
Financial health comes about when your daily systems help you build resilience and pursue opportunities.
Are you prepared for the unexpected?
Are you able to pursue your financial aspirations?
Do your financial products support resilience and opportunity?
©2016 Center for Financial Services Innovation. All rights reserved
The State of Financial Health in the U.S.
� 2014 nationwide, representative online survey
� Financial behaviors, product use, demographics
� Financial health segmentation
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Healthy Coping Vulnerable
Thriving 12%
29M adults
Focused 15%
36M adults
Stable 16%
39M adults
Striving16%
39M adults
Tenuous12%
29M adults
Unengaged16%
39M adults
At Risk12%
29M adults
28% Vulnerable68M Adults
28% Coping68M Adults
43% Healthy104M Adults
©2016 Center for Financial Services Innovation. All rights reserved
Income & Financial Health
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Healthy Not Healthy
More than 1/3 of those in the healthy segments have annual income under $60,000
More than 1/3 of those in the unhealthy segments have annual income over $60,000
©2016 Center for Financial Services Innovation. All rights reserved
Planning, Saving & Financial Health
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* These findings emerged from a regression analysis that looked at impact on financial health segment when controlling for behavioral and demographic variables.
Households that plan ahead to make sure they have the money to pay for large irregular expenses
10x more likely to be in a Healthy segment than those who cannot or do not
Those whose primary time frame for saving for the future is 5 years or more
8x more likely to be in a Healthy segment than those whose primary time frame is less than 5 years
Those with a planned saving habit 4x more likely to be in a Healthy segment than those who do not
Households with annual income at or over $100k
1.4x more likely than those < $30k
How are we going to improve the financial health of people struggling with it?
©2016 Center for Financial Services Innovation. All rights reserved
Applying Financial Health Insights
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©2016 Center for Financial Services Innovation. All rights reserved
Financial Health Measurement
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Measuring member financial health metrics alongside business metrics will enable credit unions to understand whether they are making a quantifiable difference in their members’ financial lives.
You can't manage what you can't measure.
If you can't measure it, you can't improve it.
For more detail, see: Eight Ways to Measure Financial Health
You are financially healthy when you…
SPEND
1. Spend less than income
2. Pay bills on time and in full
SAVE
3. Have sufficient liquid savings
4. Have sufficient long-term savings or assets
BORROW
5. Have a sustainable debt load
6. Have a prime credit score
PLAN
7. Have appropriate insurance
8. Plan ahead for expenses
©2016 Center for Financial Services Innovation. All rights reserved
CFSI Financial Health Score™
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� Provides a holistic, moment-in-time snapshot of an individual’s or group of customers’ financial health.
� Based on eight multiple choice questions that align with CFSI’s indicators of financial health.
� Provides one CFSI Financial Health Score™ and four sub-scores.
� The score is designed to be simple, straightforward, and easy-to-use; a starting point to measure and improve your customers’ financial health.
Spend76
Spend76
Save62
Save62
Borrow71
Borrow71
Plan63
Plan63
Fin Health Score68
Fin Health Score68
©2016 Center for Financial Services Innovation. All rights reserved
2018 Financial Health Leaders
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Members on the forefront of financial health measurement.
©2016 Center for Financial Services Innovation. All rights reserved
The Future of Financial Health Measurement
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Survey Data
TransactionalData
Executional simplicity����
Holistic view of customers’ situation����
Objectivity of data����
Ability to update frequently to track progress����
Ability to measure all customers����
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Thank You!
Darren Easton, Senior Director, [email protected]