CFSI Study Cites Key Indicators of Financial Health
A new report from the Center for Financial Services Innovation (CFSI) aims to help financial services providers and nonprofits better understand their customers’ financial health—and how they can help improve it. The study is centered on eight key indicators that provide a better understanding of consumers’ financial health than traditional measures like credit scores and net worth, according to CFSI.
“Banks, fintech companies and other providers can position themselves today as leaders in helping consumers solve their financial challenges,” said Jennifer Tescher, president and CEO, CFSI. “Providers that do this well will be rewarded by their customers and they will play a crucial role in shaping the industry’s future and the country. It starts with measuring what matters.”
The CFSI’s eight key indicators of financial health are:
- Spending less than income
- Paying bills on time and in full
- Having sufficient liquid savings
- Having sufficient long-term savings or assets
- Having a sustainable debt load
- Having a prime credit score
- Having appropriate insurance
- Planning ahead for expenses
The report provides more information on each indicator, including classification levels and the key data needed to assess a given customer’s level of health in each area, as well as ways in which providers can help customers improve their standing in each area. As a next step, CFSI is testing the implementation of the indicators with specific companies and developing an overall financial health score based on the indicators, which will enable companies to track and measure the financial health of their customers.
Conducted with support from the MetLife Foundation, the report is based on data from more than 20 consumer finance studies and consultation with more than 85 financial services providers and influencers.
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