The concept of financial health has gained tremendous ground in the U.S. since Financial Health Network started talking about it in 2014. This progress was created by the many forward-thinking businesses and organizations that are driving better financial health outcomes for their customers and employees every day. Many of these businesses and organizations have used our framework for measuring financial health or have partnered with our teams to make financial health a business priority.
Outside the U.S., however, the global focus has traditionally been on financial inclusion, namely access to and usage of financial services. As a result of that focus, the handful of promising financial health efforts outside the U.S. have been isolated, lacking a centralized forum, practices, and priorities – until now.
In January 2021, the Financial Health Network joined a Financial Health Working Group, convened by H.M. Queen Máxima of the Netherlands, in her capacity as the U.N. Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). As part of this group, we worked with leaders from the global financial and development sectors to establish a shared vision for how to promote financial health globally.
The Financial Health Working Group recently released three reports that focus on the three key priorities identified by the group: 1) financial health policy, 2) financial health measurement, and 3) private sector action. These three priorities mirror much of our ongoing programs and research initiatives, and we’re excited to see this kind of global attention on financial health.
There are several takeaways from the global priorities and learnings, and how they align to Financial Health Network’s focus in the U.S.:
- Focus Global Policymaker Attention on Financial Health
Unpacking the policy implications of a global financial health agenda is a complex task within the context of myriad country-specific regulatory agencies, differing policy frameworks, and competing priorities. The new report Financial Health: An Introduction for Financial Sector Policymakers delves into important foundational issues, including the factors that drive financial health, the similarities and differences between financial health and consumer protection, the regulatory bodies that need to be engaged in a financial health agenda, and the role regulators and policymakers can play to improve consumer financial health in their countries. This report mirrors several of the recommendations made in our recent position paper calling on the U.S. government to establish a system for measuring and assessing the financial health of people living in the U.S.
- Build Global Frameworks To Measure Financial Health
Measurement is complex, even when focused on one market. Attempting to develop a global framework to measure and compare financial health within and across countries presents a host of challenges. The report Measuring Financial Health: Concepts and Considerations makes a compelling case for the importance of a national measurement strategy, along with tactical advice on how to implement this strategy. This advice draws on many existing measurement frameworks, including our FinHealth Score®, the Consumer Financial Protection Bureau’s Measuring Financial Well-Being survey, and the Commonwealth Bank of Australia and the Melbourne Institute’s Financial Wellbeing Scale. The UNSGSA report also encourages companies to consider ways to measure financial health using administrative data in addition to survey data.Furthermore, the UNSGSA report tackles some of the challenges and benefits of a global set of financial health indicators. There is increasing global interest in enabling cross-country comparisons and benchmarking. The Financial Health Working Group recommends in the report that we should begin to develop a widely accepted global financial health scale to standardize financial health measurement across countries.
- Catalyze Global Private Sector Action on Financial Health
The Financial Health Working Group has also explored the evidence to date on the business case for financial health, and has discussed how a company can become a financial health-focused business in the Financial Service Providers and Financial Health presentation. The Commonwealth Bank of Australia, PayPal, and ING Bank – each longtime Financial Health Network partners – are profiled within this presentation sharing how they have begun to measure the financial health of their customers and employees, and the adjustments they’ve made in response to the data. Much of this work was built on the Financial Health Network’s eight years of experience building a membership network of companies that are in the financial health business as well as developing frameworks to guide companies on how to build financial health into their businesses.
It was exciting to collaborate with worldwide partners and organizations to discuss the various challenges in building and enabling financial health in this first phase of the Financial Health Working Group program. There is growing momentum globally around the importance of focusing on the access to and usage of financial services, on real outcomes in the lives of consumers, and on the ways these tools can help build people’s overall financial health.
The Financial Health Network offers a wealth of resources for businesses seeking to enhance their financial health strategy, including our Financial Health Maturity Assessment Program (FinHealth MAP), which comprises pillars, phases, and functions with step-by-step guidance, and our Employer FinHealth Toolkit, a roadmap for how companies can engage employees at all phases of the financial health journey.
If you are interested in starting a conversation on how your organization can progress to the next phase of its financial health journey, contact Marisa Walster at mwalster@finhealthnetwork.org. You may also reach out to Sarah Parker at sparker@finhealthnetwork.org to learn more about the UNSGSA Financial Health Working Group.
