It’s a Brave New World: Harnessing the Power of Consumer Data to Improve Financial Health
Data plays an important role in improving consumers’ lives. While there are some risks to sharing data online, with the right safeguards in place, consumer data can provide powerful insights into people’s financial lives that financial service providers can use to develop products, programs, and solutions to improve their customers’ lives.
The Financial Health Network has worked with companies across the financial services industry over the last few years to put in place such safeguards. We are now putting these principles into practice through the U.S. Financial Health Pulse, a groundbreaking research initiative designed to provide ongoing snapshots of financial health in America. Through a combination of consumer surveys and transactional data, we will provide regularly refreshed insights about how people in America are managing their money and how financial health trends are changing over time.
We plan to also use these data to:
● Develop a measurement framework that companies can use to assess their customers’ financial health using their own transactional and account data. Companies can leverage this framework alongside the FinHealth Score™ to gain nuanced, granular insights about their customers’ financial health and how it’s changing over time. Providers can also leverage this framework to analyze whether a new product or service is making a meaningful difference in their customers’ financial lives.
● Release ongoing, nationally representative insights about financial health in America. Together with insights from annual benchmarking surveys, we will analyze these data to better understand how people are spending, saving, borrowing, and planning. Eventually, these data may also help us understand how certain events (such as a natural disaster) impact the financial health of the people affected. Financial service providers can use the measurement framework to assess their own customers’ financial health against these national and regional benchmarks.
Along the way, we plan to consult with industry experts and members of our network that have already made great strides in leveraging data for financial health measurement, such as the JPMorganChase Institute and the Commonwealth Bank of Australia.
The security of consumers’ data is of utmost importance. The Financial Health Network and our partners are proving that it is possible to responsibly use consumer data to better understand and improve the financial lives of people in America. To join this discussion, please subscribe to updates from the U.S. Financial Health Pulse.
This post is the latest in a series from the authors of the U.S. Financial Health Pulse baseline report (view the first post here). In the coming months, we plan to discuss different cuts of the data and respond to compelling questions and feedback we receive from our audience.
The U.S. Financial Health Pulse is made possible through a founding partnership with Flourish, a venture of The Omidyar Group. Additional support is provided by MetLife Foundation, founding sponsor of the Financial Health Network’s financial health work, and AARP. The University of Southern California Dornsife Center for Economic and Social Research is fielding the study to their online panel, the Understanding America Study. Engineers and data analysts at Plaid are collecting and analyzing transactional and account data from study participants who authorize it.
- In partnership with dozens of industry stakeholders, the Financial Health Network developed a set of principles to facilitate the safe and reliable sharing of consumers’ financial data across institutions. In 2017, we outlined a set of steps that financial service providers and regulators can take to develop an improved data-sharing ecosystem. Given the complex nature of financial health, ensuring the smooth transfer of data across companies ensures that both consumers and providers can access data to understand how a person is spending, saving, borrowing, and planning.