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Tech, Gamification Among Ways to Improve Fiscal Health: Report

Technology is a crucial avenue to improve financial health, and the fintech space has been increasingly useful as a tool to facilitate that end, reads a newly published research report from the Financial Health Network.

The report, “Building Consumer Savings with Fintech Innovations,” focuses specifically on the value and importance of savings, and the myriad technologies that can assist forward-thinking consumers looking to improve their overall financial wellbeing. The report was generated through a combination of research from the Consumer Financial Protection Bureau (CFPB) and considers the network’s proprietary FinHealth Score system.  

According to the CFPB, research indicates that although savings have proved to be a critical component of fiscal health, fully 39% of U.S. residents had “less than three months’ worth of expenses available in savings.”

“Some fintech companies have used data and algorithms to develop innovative models that can help consumers build up their savings, while incumbent financial institutions have also evolved their savings offerings to include features like round-up savings,” according to the organization. “These market evolutions and new models take two distinct, complementary approaches to helping consumers increase their savings: reducing the effort to save and making saving more compelling.”

From Twitter

JA UGANDA @JA_Uganda

"Teachers from some of the primary schools that are beneficiary to the #ChaChingUg financial literacy program sharing smiles. The program teaches young people the concepts of Earn, Save, Spend and Donate. As our partners @PrudentialUG say, every time is 'Good morning' here. https://twitter.com/i/status/1549287838956527619"

Among some of the chief innovations and tactics available to consumers are “smart automated transfers,” the above-mentioned round-up savings, gamification and prize-linked savings, according to the Financial Health Network. Some examples of companies operating in this space include Dave, Even and Digit.

“Gamification can also make the savings process more engaging by integrating game-like elements in a financial product or app. SavingsQuest encourages users to save by tracking their progress, allowing users to earn badges or ‘level up’ as they progress toward their savings goals,” according to the report. “Other products aim to make the learning process fun and engaging: Farm Blitz allows users to learn about interest, borrowing, and long-term savings while playing a game in the role of a farmer.”

According to Relevant Software, gamification has become pretty big business in recent years. Its value, notes the software firm, has more than doubled over a five-year period and investment in the concept jumped from $4.91 billion in 2016 to just under $12 billion last year. “As mobile games proliferate, gamified financial apps strive to create a comparable experience that is fun, engaging, and effective,” the financial health report concludes.

Another effective strategy promulgated in the report is to identify multiple savings goals rather than relying on one set figure. Users who had multiple goals saved $114, on average, more for each deposit over a five-month window than individuals who had only one goal, according to Digit, which is cited in the report.

“Improvements to savings have the potential to help consumers weather the shocks of unexpected expenses and prepare for the future, making savings a critical pillar of financial health,” said Andrew Dunn, senior manager of data at Financial Health Network, per an announcement of the report

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