Occasional Paper No. 58: Understanding consumer financial wellbeing through banking data

In this paper, we aim to better understand consumer financial wellbeing through survey responses, analysis of banking data and the objective factors most closely associated with money management stress. 

Occasional Paper No.58 (PDF)

Summary

Within this paper, we integrate two approaches: investigating the relationship between subjective financial wellbeing, measured by self-reported responses of survey respondents, and objective financial wellbeing, measured by the same respondents’ bank account data.

Our objective is to better understand how differences in financial wellbeing change with the objective state of their finances. We investigate potential indicators of low subjective wellbeing such as:

  • demographics
  • average balances
  • use of credit
  • digital banking usage patterns
  • the role of volatility in spending, income and account balances

The findings show, firstly, our measure of subjective financial wellbeing can be used to quantify the psychological impact of changes in objective financial wellbeing. Secondly, that data derived from consumers’ bank accounts with their consent can be used to identify consumers with lower financial wellbeing. Finally, that our findings on financial volatility raise questions for further research on the metrics of irregular income or expenditure.

Authors

Joe Gladstone, Jeroen Nieboer and Karthik Raghavan

Disclaimer

Occasional Papers contribute to the work of the FCA by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence that the FCA may use while discharging its functions and to inform its views. The FCA endeavours to ensure that research outputs are correct, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that Occasional Papers contain any errors or omissions, they should be attributed to the individual authors, rather than to the FCA.