New CFSI Survey Identifies Significant Gap Between Financial Industry’s Intentions and Actions for Improving Customer Financial Health
The recent U.S. Financial Health Pulse report revealed that only 28 percent of Americans are financially healthy. In a new report released today, “From Buzzword to Business Model: How Industry Executives View Financial Health,” two-thirds of senior financial services executives believe consumer financial health initiatives can help their customers and deliver important strategic value for their businesses. Yet, despite this urgent consumer need and the possible business benefits, the study found only about half of respondents currently incorporate these efforts into their strategic plans and only a third are currently tracking customer health outcomes.
This new report from the Center for Financial Services Innovation (CFSI), the nation’s authority on consumer financial health, in partnership with Flourish, a venture of the Omidyar Group, surveyed 659 senior financial services executives regarding how they view their customers’ financial health. Financial health is defined as the daily financial systems that allow people to be resilient and pursue opportunities, including the ability to spend, save, borrow, and plan.
The majority of executives surveyed (69%) feel efforts to improve customer financial health have potential to increase profitability and bolster customer loyalty. However, these same executives still struggle with translating their ideas around financial health into meaningful, sustainable and helpful engagement with their customers. Key takeaways from the survey include:
- The sizable gap between intention and action indicates the industry has a challenge in translating strategic priorities to concrete action;
- Larger-size institutions report doing more to improve customer financial health, suggesting that institutions with greater access to resources have been early-movers in investing in financial health solutions;
- Additionally, retirement and fintech companies already offer customers more financial health management tools than other industry segments
“It is encouraging that so many executives have acknowledged the importance of consumer financial health and understand the inherent business value of improving it,” said President and CEO of CFSI Jennifer Tescher. “However, this study shows that much work remains to help companies and leaders adapt the concept of financial health into concrete solutions to deliver success for their business and their customers.”
Tracking and measuring changes in customer financial health can help financial institutions identify impactful interventions, a challenging but important component of the financial health journey. While many executives surveyed expressed a commitment to financial health, only about a third (35 percent) of the executives stated their institutions are currently tracking customer financial health outcomes and improving their offerings based on customer financial health data. While each organization may have unique needs to measure and track financial health, CFSI offers organizations a starting framework, The Financial Health Journey, and a scoring mechanism, the CFSI Financial Health ScoreⓇ Toolkit, to track, measure and integrate financial health into products and services.
Additional findings from the survey include:
- Three-fifths (60 percent) of all respondents agreed that improving customer financial health can be a competitive differentiator;
- About half (51 percent) of executives said that they have launched at least one product or service to improve customer financial health;
- One-third (33 percent) of executives stated that their companies offer products or services to their own employees to improve their financial health;
- Only a third (37 percent) of the respondents reported that their institutions offer low-cost, entry-level transaction accounts which are particularly relevant for struggling customers.
- Over 84 percent of medium to large banks survey their customers to better understand their financial health vs. 52 percent of small banks;
- 91 percent of retirement companies and 81 percent of fintechs have an individual or team within their institution with responsibility for customer financial health strategy vs. 75% of all other respondents
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