This year on Financial Health Matters Day, we at the Center for Financial Inclusion at Accion are taking a look at the new Global Findex data and what it says about the financial health of respondents around the world. Because of our recent work on financial health in Eastern Europe and Central Asia, we decided to take a closer look at the Findex numbers from the region.
The 2017 Global Findex shows a substantial increase in account ownership between 2014 and 2017, from 62 percent to 69 percent of adults. However, one indicator that has decreased across this same period is the Findex’s proxy for financial health – the resilience question. This metric measures a person’s ability to come up with emergency funds in the amount of 1/20 GNI per capita in the next month (for reference, this is a little less than $3,000 in the U.S. context, and a little less than 700 dinar in Serbia). Isolating Eastern Europe and Central Asia, the percentage of people who said they could come up with this amount actually decreased slightly from 64 percent in 2014 to 61 percent in 2017.
This data echoes some of the findings presented in the new brief from CFI and the Microfinance Centre (MFC) in Warsaw, Toward a Financial Health Tool for Customers – Test Results from Eastern Europe and Central Asia. As its title suggests, the brief shares findings from a financial health quiz that was tested in late 2017 among the clients and staff of organizations partnering with MFC on its Borrow Wisely Campaign. CFI and MFC are working together to build a smartphone-based tool to assist customers with gauging and improving their financial health, starting with the financial health quiz.
The quiz measured financial health across three categories – day-to-day management, resilience, and longer-term planning. Overall, customers scored highest on questions related to their day-to-day management of finances and lowest in questions related to their financial resilience. Our quiz also asked the same resilience question as the Findex. Respondents scored an average of 63 points out of 100, quite in line with Findex results.
Our test of the financial health quiz in the region revealed that people want help with many facets of their financial lives, from short term money management to longer term planning. As noted in our brief, “They also want to know how to plan in unstable economic conditions; they want a blueprint for steps to take when a financial crisis hits; and they want help setting and sticking to spending limits and reducing or consolidating debts. Several people wanted to know how to talk with their families and involve their children in good financial behavior.”
Despite the desire for better habits that respondents expressed during our financial health testing, the Findex shows savings rates in the region are lower than global averages, with 14 percent of adults saving at a financial institution, compared to 27 percent globally and 37 percent saving in any form, compared to 48 percent globally.
Most of the Global Findex is focused on account access, and the resilience question is not a headline in the narrative released by the World Bank. But all of those working in financial inclusion need to think about how to ensure that financial services are making a meaningful difference in the financial health of customers.
CFI and the Microfinance Centre will continue to use insights like those encapsulated in the brief and the Findex to explore how digital channels may be used to help improve customers’ financial health. We look forward to sharing more lessons learned in our finhealth app project along the way.
Financial Health Matters Day (#FinHealthMatters) is an initiative of the Center for Financial Services Innovation (CFSI). This year CFSI is directing particular attention to student financial health. CFSI finds that although 57 percent of Americans struggle with their overall financial health, 75 percent of students aren’t sure if they’d be able to come up with $1,000 in the next month. Learn more and explore ways to get involved in Financial Health Matters Day here.
Image credit: Brigitte Brefort / The World Bank
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