The Network, founded in 2004 as the Center for Financial Services Innovation, provides research, consulting, and innovation support to companies (including many credit unions) seeking to build or improve financial well-being and enrich related activities.
The group refers to the concept as “financial health,” with the view that financial health comes about when daily financial systems allow a consumer to be resilient and pursue opportunities over time.
Thus, the Network's definition of financial health is similar to the CFPB’s notion of financial well-being with elements that include security and choice both in the present and the future.
The Network, like the CFPB, offers a short survey tool credit unions can use to evaluate the financial health of both employees and members. The Network's survey examines four dimensions—spending, saving, borrowing, and planning—and two key metrics within each grouping.
Questions measure the degree to which consumers:
Spend less than their income.
Pay bills on time.
Have sufficient liquid savings.
Have sufficient long-term savings.
Have a manageable debt load.
Have a prime credit score.
Have appropriate insurance.
Plan ahead financially.
The resulting composite score is calculated within a scale of 0 to 100. Consumers who report few health outcomes across few (or none) of the eight financial indicators receive scores ranging from 0 to 29, and are deemed “financially vulnerable.”
Those who report health outcomes across some but not all of the eight indicators receive scores between 40 and 79 and are deemed “financially coping.”
Finally, consumers who report healthy outcomes across all eight financial indicators receive scores ranging between 80 and 100—a group seen as “financially healthy.”
Both the CFPB and the Network provide comparative national benchmarks, as well as comparisons by age, household income, and region or state. The CFPB has employment status benchmarks and the Network provides education benchmarks.
Both groups offer tips and tools to help consumers take control of day-to-day money management and get on track to secure a solid financial future.
Best of all, both tools are available at no cost and can easily be incorporated into the credit union core mission and into daily interactions with members, regardless of the specific strategy your credit union has adopted to achieve that mission.
Both tools make it clear that financial health is deeply connected to every other aspect of a person’s life—their physical and mental health, access to housing and reliable transportation, and so on. So redoubling your credit union’s efforts to show care and concern around financial well-being can pay big dividends.
Members certainly notice what you do. Just months before the pandemic hit, Gallup reported that credit unions are far better at supporting members' feelings of well-being than banks, noting “credit unions appear to be at their best far more often than banks. Gallup's research shows meaningful differences between customers and members regarding perceptions of the financial well-being support their institutions offer.”
Researchers stated, “credit unions have built strong member relationships by using a personal approach, thoughtful products and member-centric service models to help members manage their finances.”
Nearly half—46% of members—strongly agreed their credit union does this while only 31% of bank customers felt similarly.
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
