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Athletes at the 2018 Winter Olympics face barriers to financial health

The following post was originally published on the Accion blog.

Nearly 3,000 top athletes from 92 countries are converging on PyeongChang, South Korea to ski, skate, sled, and curl their way to Olympic gold and glory. In addition to medals, some athletes will walk away with lucrative sponsorships. But others will return to part-time jobs, unemployment, modest stipends, and other financial situations that don’t make it on the front of a Wheaties box.

Unfortunately, gold, silver, and bronze don’t always translate to enough green for athletes to stay solvent. While medals often come with cash prizes — a gold medal will net a U.S. competitor $37,500 — these awards are only for a handful of individuals in each sport, and they pale in comparison to the funds needed to become a world-class contender. The prices of training, equipment, travel, healthcare, and other expenses add up for those competing at a global level. The high costs become particularly pronounced when you consider the increased likelihood of injuries, the difficulty of holding a full-time job while on a rigorous training schedule, and the fact that most sports only have a narrow window of time when athletes can compete in their prime.

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Insights from a global seed-stage investor in fintech for the underserved

> Posted by Amee Parbhoo, Director of Investments, Accion Venture Lab

The following post was originally published on the Accion blog.

We’re in the middle of a fintech boom that could change the world. As a seed-stage investor in fintech for the underserved, Accion Venture Lab continues to see innovative startups increasing access to, reducing the cost of, or improving the quality of financial services for underserved individuals and small businesses around the world.

As we kick off a new year, we’re particularly excited about seven areas of startup-led innovation.

Digital neobanks

SmartMEI is a digital neobank serving small businesses in Brazil

In the last few years, we’ve seen the emergence of a number of digital neobanks. Neobanks offer a user-friendly digital interface and a platform for financial services without maintaining their own banking licenses. With a focus on user experience and digital applications, neobanks stand to offer faster and better service to the underserved. Moving forward, neobanks will need to provide both a compelling product for a targeted customer segment and a suite of offerings that go beyond basic accounts or credit cards to retain customers and improve unit economics. Innovators in this space include NOW Money, which offers migrant workers in the UAE a platform to more efficiently transfer remittances and access to other products and services over time, and SmartMEI, which offers small businesses in Brazil a free tax tool and access to a broader set of financial services.

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> Posted by Center Staff

2017 was certainly an eventful year. And our year at CFI was no exception. Through our CFI Fellows Program and partnership with the Institute of International Finance, Mainstreaming Financial Inclusion, we produced thought-provoking research on fintech partnerships, the role of human touch in a digital age, breakthroughs in insurance and more. In the client protection area, 24 financial institutions were Smart Certified, bringing the total number of certified institutions to 94. The Africa Board Fellowship Program continued to make a difference at the governance level of financial institutions across Africa, and now roughly 200 CEOs and board members have participated in the program. And more…

Before we celebrate the New Year, we wanted to pause and look back at some of our favorite moments of 2017.

Financial Health as a Global Framework

We developed a new model for assessing financial health. The financial health framework was developed through a project led by the Center for Financial Services Innovation (CFSI) with CFI and Dalberg as partners. The framework offers a globally applicable model for financial health that includes six indicators of financial health and four contributing factors that are particularly relevant to the developing world.

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> Posted by Emma Morse, Project Specialist, CFI

Embed from Getty Images

Mavis Wanczyk, a staff member at Mercy Medical Center in Springfield, Massachusetts and a mother of two, recently became a multi-millionaire, revealing herself as the $758.7 million Powerball jackpot winner – the largest individual winner ever. Wanczyk quit her job of 32 years less than 24 hours later.

Reflecting on her decision, Wanczyk remarks, “I was just there to buy it, for just luck. Just go in, buy a scratch ticket, and say maybe it’s me, maybe it won’t be me. It’s just a chance, a chance I had to take.”

The odds of winning the Powerball jackpot are 1 in over 292 million. In order to purchase all of the possible combinations, an individual would need to spend $584,402,676 on tickets. You are about 100,000 times more likely to be struck by lightning at some point in your lifetime than you are to hit this particular jackpot.

So why do Americans spend $70.15 billion on lottery tickets annually, while very few of us live in fear of being struck by lightning? Read the rest of this entry »

> Posted by Elisabeth Rhyne, Managing Director, CFI

Client of Akiba Bank in Tanzania

Around the world today, financial service providers, technology entrepreneurs and policy makers are engaged in building a financial system that reaches out to previously excluded people, such as lower income people, very small businesses, rural dwellers, and women. Although this work is carried out in the name of the consumer, all too often, scant attention is paid to the real needs and desires consumers and very small enterprise owners have.

With that in mind, here is a thought experiment. A thought experiment is an “exercise of the imagination used to investigate the nature of things.” The question for this experiment is this:

Imagine that consumers were the creators of the inclusive finance system. What would such a system look like?

What characteristics would emerge if the needs, desires and preferences of the target customers of financial inclusion were the driving force to shape their services? The observations here are drawn from consumer research conducted or commissioned by the Center for Financial Inclusion, including research in Peru, Pakistan, Georgia and Benin for the Client Voice project of the Smart Campaign, in Kenya and India for our project on financial health, in India and Mexico for our study of financial capability, and again in Kenya and India for two CFI Fellows’ projects on the role of human touch in the digital age. I offer ten propositions based on this research.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

At CFI we often talk about financial health as if it is a crisp, free-standing concept. Moreover, by connecting financial health to financial inclusion we imply – and hope – that we can affect financial health by offering the right kind of financial services and/or developing a person’s financial capabilities. However, while there is truth to this view, it is sometimes easy to overestimate the power of financial services. We need to think about how both financial and economic factors intertwine to create outcomes. If we compartmentalize financial actions, we ignore the very powerful economic factors that influence financial health.

As defined by the Center for Financial Services Innovation (CFSI) – and embraced by us at CFI – three elements must all be present to declare a person, family or microenterprise to be financially healthy:

  • Balanced day-to-day money management – outflows balanced with incomes over time.
  • Protection from shocks – ability to draw down, borrow or call upon resources to lessen the blow when bad things happen.
  • Pursuit of goals – ability to accumulate resources for medium to long-term purposes, whether personal or productive.

In speaking with low income people around the world, we find that many people intuitively define financial health in these terms, and nearly everyone tries to pursue financial health in their own lives. But achieving these three elements is not just a financial task. It requires both economic and financial actions. (It also hinges on personal choices and capabilities, but we will set these aside for now.)

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> Posted by Jeffrey Riecke, Senior Specialist, CFI

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If you’re based in the United States, you’ve likely heard about how student loan debt is problematic and has been for years. The growing volume of student debt that has become more and more the norm is so high, its effects can be overwhelming. But how bad is it? Is it just a matter of students needing to hunker down (a little longer) and pay their dues (a little more)?

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Last month CFI invited all of Accion’s staff, both inside and outside the U.S., to complete a questionnaire on their own financial health. Many of you have seen and even taken this survey (see blog post here). The survey is broadly based on the U.S. financial health framework developed by the Center for Financial Services Innovation (CFSI), which we believe is a better fit for Accion employees than the global financial health framework we developed with CFSI for base-of-the-pyramid markets. In this post we report on what we found when “Accionistas” took the survey.

It turns out that Accionistas are a pretty financially healthy bunch. Three quarters of the 122 people who took the survey scored in the good or excellent range. Given that Accion employees have steady employment with fringe benefits (pension savings plan, health insurance), this is not terribly surprising. As Jonathan Morduch and Rachel Schneider show in The Financial Diaries, income volatility is one of the biggest causes of financial stress among American families. Thankfully, Accion employees, like most employees of international development non-profits, can count on the same paycheck week after week, and this makes the task of staying financially healthy much easier. Health insurance is also an essential source of financial protection, as is car insurance.

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BEFIT photographers

BEFIT photographers. Photo Credit: Elisabeth Rhyne

> Posted by Elisabeth Rhyne, Managing Director, CFI

Imagine a country unlike any you have ever seen – a mountainous land without Starbucks, where pop stars sing praises of the king, and men wear skirts with knee socks. You might be tempted to relegate the country to the category of charming or exotic. But that would be a disservice to Bhutan, which presents itself as kind, intelligent and ready to participate in the modern world.

I attended the Bhutan Economic Forum for Innovative Transformation’s summit on “Equitable Growth through Financial Inclusion” held last month in Thimphu, Bhutan’s capital city, and that provided me with an opportunity to hear in depth about its unique development philosophy – Gross National Happiness (GNH). Before we turn to the connections between GNH and financial health, here is some important context. Read the rest of this entry »

> Posted by Allyse McGrath, Specialist, CFI

How financially healthy are you? Financial health is a relatively new term in the financial inclusion community, and aims to provide a model for assessing how well one’s daily financial systems enable a person or household to build resilience to shocks and pursue opportunities and dreams. Last month, CFI in collaboration with The Center for Financial Services Innovation (CFSI) and Dalberg’s Design Impact Group (DIG) launched the results of a year-long study into how to adapt CFSI’s U.S.-based financial health framework to a developing country, BoP context. The study found that the concept of financial health can be applied to lower-income people in emerging markets, though the indicators and measures of financial health in this context were different. We encourage you to check out the full report, Beyond Financial Inclusion: Financial Health as a Global Framework, to learn more about our financial health framework for the developing world.

We also encourage you to engage with your own financial health in order to get a better grasp on the concept. To better understand the concept ourselves, CFI and Accion staff (building on the work of our year-long study and on the U.S. Financial Health Framework of CFSI) recently participated in an organization-wide financial health survey. Over 120 Accionistas took the survey and received assessments of their financial health. After reviewing the responses, we have uncovered some interesting insights into how people’s debts evolve as they age and the diverse set of tools they are using to manage their financial lives.

As a next step in the process of understanding, we want to share this survey with you. We hope it will help you both engage with the concept of financial health and potentially improve your own financial health. We also hope your feedback will help us strengthen our framework and this tool.  Finally, we look forward to reporting back soon on the financial health of CFI’s (anonymous) blog readers!

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.