An ambitious project led by Nest Insight has set out the scale of Britain’s financial resilience challenge and launched multiple real-world trials to find scalable ways of supporting millions of underserved households.
The Financial Resilience project, led by Nest Insight and supported by JPMorganChase, brings together qualitative, quantitative and trial-based analysis to identify ways to support people with low financial resilience – those without the ability to weather present financial shocks and prepare for shocks that might happen in the future. The multi-year project involves 16 organisations including research agencies, frontline support organisations, financial services providers, employers, and people with lived experience of low financial resilience.
Bridging gaps, building resilience – the first of the project’s publications, released today – shares initial learnings on how the UK financial system is – and isn’t – working for those with low resilience. Through a bespoke set of resilience measures and Office for National Statistics (ONS) data, the publication highlights that 3.1 million households would struggle to cope with more than a month of lost income.
Drawing on a landscape review and qualitative interviews and studies with more than 100 experts by profession and by experience, the publication sets out four ‘states of shock’: the scenarios people experience after a financial shock, in which the financial system sometimes does more harm than good.
In partnership with employers, employee benefits providers and credit unions, multiple real-world trials have now been launched to evaluate ways of supporting people before, during and after those states of shock: in particular, to evaluate areas of potential such as borrowing-and-savings ‘hybrid’ solutions, where people are supported to start saving and build financial resilience at different points in their borrowing journey. The team also aims to better understand providers’ perspectives on the feasibility and commercial viability of solutions, as well as any regulatory considerations.
Sope Otulana, Associate Director of Research and Innovation at Nest Insight, said: “Despite many households’ best efforts to manage high or unexpected expenses, or a loss of income, the options currently available can leave them more vulnerable, more indebted, less able to save, or stuck repeating patterns. We believe there is an opportunity to expand the options available to households on low and moderate incomes, including through joined-up debt and savings solutions, targeted loans, and solutions that offer greater flexibility for managing variable pay. Being able to meet a precarious financial moment with options that help you progress, rather than being further set back, is the core of resilience.”
Tracy, Nest Insight ‘Experts in Action’ panel member, comments: “Right now, more and more people are struggling financially…You can have a plan, but it’s the in-betweens, the unexpected repair or something that needs to be purchased, that throws you out of sync, that causes spirals. It’s not a secret anymore: money troubles are everywhere. That’s why this project matters. If people aren’t financially resilient, it bleeds into every part of their lives and all parts of society; it needs to be addressed…Not everything can be fixed, but these ideas that link to big issues affecting the majority of people in this country could help people move forward. However, they need to be simple, clear, and designed with real lives in mind. People’s circumstances change, and tools need to change with them.”
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