Serving the financially at risk: CFSI profiles, Part 1

August 25, 2015

CHICAGO (8/25/15)--Nearly 60%--or 138 million--Americans struggle with their finances, according to the Center for Financial Services Innovation (CFSI).

As part of its ongoing analysis of American consumer financial health, the Chicago-based research firm  recently released four reports detailing the four segments that make up that struggling population, and how financial institutions can craft their service offerings to cater to each. 

Over the next four days, News Now will cover each of the four segments, which include “The Financially At Risk,” “The Financially Unengaged,” “The Financially Tenuous” and “The Financially Striving.”

CFSIThe Financially At Risk, which encompasses 29 million Americans or 12% of the U.S. population, is the most likely of all segments to live paycheck to paycheck or run out of money before the end of the month, the CFSI said.

“Seven in 10 struggle to keep on top of their bills, and a quarter are falling behind on credit and bill payments,” the center found. “They are the most likely of all segments to have lost a job, had hours cut or pay reduced, received an eviction or foreclosure notice, or had a health emergency in the last five years.”

Breaking down the services these consumers use, 44% do not have a savings account; 46% do not have a credit card; 16% use a prepaid card--more than any other segment; and 12% reached out for debt counseling advice in the last five years.

To reach these consumers, the CFSI said financial institutions should offer:

  • Financial coaching;
  • Debt counseling; and
  • Access to individual development accounts, which help low-income families and consumers reach savings goals and build assets.

“Government payments can also serve as an on-ramp to the financial sector by offering direct deposit, prepaid cards, and personal financial management tools linked to benefits cards,” the CFSI said.