How Data Is Opening the Door to Financial Health
Consumers have complicated financial lives. Gone are the days when someone would only share financial data (like a credit score, savings account balance, or car loan payment) with their bank—and vice versa. Now, a consumer can share their financial data with all kinds of service and product providers, including budgeting apps, money-management companies, and savings products, like SaverLife. This marrying of financial information helps bring everything into focus and paint a broader more accurate picture of financial health.
We recently responded to the Consumer Financial Protection Bureau’s Rulemaking on Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act because we believe that consumers should have agency over their own financial data, and that they should be able to leverage innovative financial services that empower them along their unique financial journey.
In recent years, an influx of financial technology (fintech) has offered consumers opportunities to seek out reliable tools and resources beyond traditional financial institutions. The trouble is: with a variety of financial service and product providers available, keeping track of income and expense streams can quickly become an overwhelming process—especially when data isn’t shared across platforms. Financial services that allow users to review all of their data in one secure place can provide real value to consumers, especially people living with low-to-moderate incomes. SaverLife sees this firsthand as a nonprofit fintech that serves over 600,000 members from across the country.
So, how can fintech be used to simplify the financial lives of all hard-working Americans? Why is it important that consumers have full ownership and access to their data? Read on to see how fintech and data can be leveraged for good to help all people achieve their savings goals.
Creating a Holistic Financial View
Financial service and product providers are prioritizing one key component in their work: access to data. With consumers using multiple accounts across different financial institutions, these providers recognize that a centralized data-sharing system can open up major possibilities for users. The consumer can view and manage all of their transactions in a single interface, leading to easier and more efficient financial management. In fact, more than two-thirds (69%) of consumers say that these services make it easier to keep on top of their money, while a majority of consumers (55%) share that they make it easier to stick to a budget.
Streamlining Support From Public Programs
By creating centralized, data-sharing platforms, consumers can monitor their finances across accounts and track their benefits from public programs. This means that, for the people who make up their household balance sheets through a blend of earned income and public support, they can use fintech to monitor services from Electronic Benefits Transfer cards (EBT), their bank or credit union, credit card companies, or other programs all in one place.
Bringing data and public benefits together offers important insight into the complex financial lives of people living with low-to-moderate incomes and encourages the financial sector to create a more inclusive money-management system that accounts for this complexity.
Improving Data Transparency
Limited data gives consumers limited choices. They have to continually react to their financial data rather than plan ahead. At SaverLife, we believe that all consumers deserve full rights over and transparent access to their financial data.
With improved data transparency:
Consumers will have more options when making choices about their financial future.
Consumers will be able to review elements of their financial health more frequently and without penalty, such as their credit score or low account balance.
Consumers won’t have connectivity issues when linking their bank accounts to fintech.
Consumers will have the right to appeal theft, fraud, and other errors that occur while using a particular fintech.
Financial service and product providers won’t be able to share consumers’ data without their permission.
What Does Fintech and Data for Good Look Like?
Alexandria works full time at a retail store, and she runs a side business with custom printing services. Each month, Alexandria puts a majority of her income toward rent, car payments, child care, and other essential living expenses for her family. However, in the next year, she wants to create an emergency fund with three months’ income saved for unexpected expenses. She’d also like to transform her side hustle into a full-time operation, and is planning to take out a government loan for first-time business owners.
With fintech that provides access to all her data, Alexandria can monitor her income and expenses in one place—and understand how her money choices will be tracked by the financial sector. She can review her income from her full-time position and side hustle, manage payments on her subsidized loan, watch her credit score, and work toward her long-term savings goals. Alexandria can see the big picture of her financial health and begin to improve it sooner and more easily. Moreover, she can do it all with the support of fintech service and product providers that are prioritizing her financial situation and aspirations.
Data Can Shift Narratives Away From Exclusive Wealth-Building Practices
Data-sharing across platforms can rewrite the rules for millions of those left behind by the financial system. No longer will consumers define their success by outdated, exclusionary, and oftentimes racist legacy standards for wealth-building, but be invited to define their own version of financial health and have access to financial services and products to actually achieve it.
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