This podcast with Mimi Joy explores consumer financial wellbeing in the US and initiatives to improve access to quality affordable financial services for low and moderate income Americans. Mimi shares her perspective as Head of Partnerships at the Financial Health Network, a leading authority in the space.
Topics discussed include:
- The current state of the financial health landscape
- Research on the effect of the pandemic on low and moderate income consumers and their financial wellbeing
- New approaches to serving the needs of vulnerable consumers
- Key financial health lessons for payments professionals
What is financial health?
As the economic recovery continues, financial health is attracting increased attention from stakeholders across the financial industry. The Financial Health Network, previously CFSI, works with stakeholders including banks, technology providers, and others to improve financial health by enhancing consumer resilience and increasing opportunity. The first component of this goal, resilience, refers to a household’s ability to withstand a financial shock. The second, opportunity, refers to a household’s ability to save for the future, for housing, education, or retirement.
The Financial Health Network measures the financial health of American families through periodic research including its ongoing Pulse Survey and the annual Finhealth Spend Report. Both track the financial lives of Americans, examining the effects of government stimulus, predatory lending, and new financial technology on how consumers, and especially vulnerable consumers, transact, save, and plan for the future. This research shows that low and moderate income households bear disproportionate costs for everyday financial services.
What are the levers of change?
It doesn’t have to be that way, and providers are realizing the opportunity to serve the broad swath of American consumers who lack access to quality affordable financial services and associated products. The changes don’t have to be monumental; banks eliminating overdraft fees or allowing grace periods before the imposition of an overdraft fee are good examples of seemingly mundane changes that can be hugely beneficial to consumers living paycheck-to-paycheck.
Outside of the traditional banking sector, fintechs are helping low and moderate income consumers make payments, borrow, and save through innovative new products.
What do payments professionals need to know?
As fintech players continue to expand their focus on historically underserved consumers and banks retool their offerings to better meet the needs of the segment, there’s plenty of opportunity for payments professionals to get involved in the changes going on in the industry.
Real time payments, for example, offer an opportunity to speed up access to cash for people who need their next paycheck as soon as possible. And advances in cross-border payments are making it easier for workers in the US to send money to family abroad. Providers can also use data to help consumers make informed decisions about spending and saving, and help people without a credit history borrow based on transaction patterns.
With all these developments, it’s an exciting time to be a payments professional thinking about financial health.