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Hee Sung Kim
Technical Specialist, Digital Finance and Innovation
“How do we need to approach our efforts in order to advance financial health, particularly for those who have been traditionally underserved by both the real economy and the global financial ecosystem?”
These opening remarks from Ms. Judith Karl, Executive Secretary of UNCDF, formed the basis of a learning event, “Financial Health and its Relevance to the Developing World” which was held in Singapore by UNCDF and MSC with support from the MetLife Foundation as part of the i3 Program. Entrepreneurs, FinTechs, regulators and other players that have a stake in making financial services work for the under-served customers came together to discuss what financial health means. The event explored two important aspects of financial health: what it means for the developing world and whose responsibility the financial health of end consumers really is.
Participants at the learning event in Singapore
According to the Global Findex, between 2014 and 2017, the share of adults with a financial account rose globally from 62% to 69%. Developing countries during the same period saw this proportion increase from 54% to 63%. While these metrics demonstrate progress in terms of financial inclusion, they are not indicators of how individuals, families or communities are able to navigate their financial lives or withstand a financial shock.
As such, in his introductory remarks, Mr. Krishna Thacker, Asia Regional Director for the MetLife Foundation shared that, “financial health is a shift in focus from a transactional approach to a transformational one. Merely focusing on access and usage of financial services such as savings and credit does not automatically improve the consumer’s ability to manage a financial contingency nor influence any impact on long-term financial planning”. He called for a more focused and nuanced approach to delivering customer impact in order to improve the financial health of end consumers.
During the panel discussion that brought together the private sector, think tanks and regulators, the responsibility of various stakeholders in driving the financial health of end consumers was examined. The conclusion? Everyone - the private sector, policymakers, and the consumers themselves - is responsible for financial health. The public sector is responsible for holding the private sector accountable for appropriate products. Consumers are responsible for raising their voice if something is not working, and the private sector must listen to the market.
As summed up by Ms. Judith Karl: “Financial health does not exist in a vacuum. It is inextricably linked to the real economy. Financial health can drive good personal health and education outcomes, as well as reduce poverty and inequalities… this is precisely why governments, the private sector and NGOs, as well as the multilateral and donor community need to tie the agenda of financial health into other sectors such as education, health and labor; consequently achieving several SDGs together.”
In early 2020, UNCDF will be releasing a working paper on financial health based on the learning event discussions and interviews with various experts working in this field.