Helping customers look after their finances has long been the mission of institutions such as Commonwealth Bank, but until recently, it has been difficult to measure what and how significant the impact of financial wellbeing measures have been on their lives.
Despite a huge body of research on the various aspects of financial wellbeing, no definition or metric has been consistently adopted, adding to the difficulty of measuring issues such as the control people have over their money and the capacity to absorb financial shocks.
In a ground-breaking initiative, CBA reached out to the Melbourne Institute: Applied Economic & Social Research at the University of Melbourne with an ambitious purpose to improve the financial wellbeing of customers and communities.
The purpose has been elevated to a greater level under CEO Matt Comyn and has become a driving force behind the bank’s constant reflection on its role to better understand and respond to some of Australia’s most pressing financial challenges.
The Bank has made significant progress towards that purpose in a variety of ways, including the elimination of ATM fees, the introduction of digital reminders and alerts to help people stay ahead of their finances, and the development of behaviourally informed money management solutions.
But CBA wanted to know how to measure any impact it was making on the financial wellbeing of customers to develop and improve services offered.
A better understanding of financial wellbeing
CBA partnered with the Melbourne Institute: Applied Economic & Social Research at the University of Melbourne two years ago to find a solution for measuring financial wellbeing. The methodology needed to be robust, as well as scientifically sound and repeatable - a challenge for many previous financial wellbeing studies.
The collaboration resulted in the unique development of research. Titled the CBA-MI Financial Wellbeing Scales* (Scales), the research sought to provide a new measure of financial wellbeing to better understand the financial health of Australians.
Uniquely, it combines people’s own perceptions about financial outcomes alongside banking data to show the drivers, barriers and behaviours linked to positive financial wellbeing.
Contributing to the national conversation
Financial wellbeing is a complex issue and the Scales research is a significant contribution to conversations about what financial wellbeing means in Australia. The partnership between CBA and the Melbourne Institute: Applied Economic and Social Research at the University of Melbourne demonstrates the power of collaboration between industry and academia to solve real-world problems.
The Scales can be used by Australians to better understand their own financial wellbeing, and by other institutions, academics, government, and community organisations to help build a body of knowledge about financial wellbeing that can be meaningfully shared, compared and reliably replicated, both in Australia and internationally.
For the bank, the insights are helping find new ways to better serve customers and improve their financial wellbeing over time, whether that’s through behaviourally informed educational content, digital tools or product experiences.
As the research develops and matures, it will provide a way to track outcomes and see tangible results from the initiatives and tools it offers customers.
Making it practical
To make the research relatable on an individual level, CBA used the research to create an interactive online tool** that allows anyone to assess their financial wellbeing by guiding them through a short questionnaire.
The questionnaire results in a personalised Financial Wellbeing Score and offers steps that might help people improve their financial wellbeing.
*About the research
The research underpinning the Scales is based on findings drawn from an online survey of 5,682 CBA customers in August 2017, and analysis of financial record data that was linked to the customers’ responses. For further information on the research and its findings, you can read the report: Improving the Financial Wellbeing of Australians.
**About the CBA FWB Score
The CBA Financial Wellbeing (FWB) Score is an online self-service tool which allows anyone to ‘take the test’ and assess their financial wellbeing. Based on the Scales research, the tool makes it relatable for the individual by providing tips tailored for their result.