Tale of two classes

Times are challenging. In the past 6 months, we have witnessed layoffs, wars, and economic uncertainty. Inflation is at 40-year high. Household debt rises to $16.51 trillion on higher mortgage and credit card balances, according to the latest report from New York Fed.?

According to Gallup, 16% of U.S. adults rate current conditions as excellent or good, but 47% describe them as poor. 77% of lower-income Americans say inflation impacts their finances negatively.

After hitting a record high during the pandemic, the personal savings rate in the U.S. is now at its second lowest level on record. Meanwhile, household debt is rising at its fastest pace in decades.

So how are consumers coping?

Some turn to tried and true method of cash stuffing as a way of budgeting. (Hint: Cash is not dead.)

While others resort to hardship withdrawal from their retirement accounts ...

... which, unfortunately, is not an opportunity that is available to all working Americans.

In fact, as many as 57 million Americans lack access to a workplace retirement savings plan.

Coming up with enough money for retirement is a challenge for all workers. But the situation is even more dire for some demographics:

• Just 36% of Black households ages 55 to 64 have any retirement savings. That number goes down to 30% for Hispanic households. Those that do have savings often have very little set aside.
• 50% of women say they are behind on retirement savings, according to a report by Goldman Sachs. 24% said they are “very behind schedule,” compared with 14% of men.

Consumers need better and more holistic tools to manage their finances, lower their debt, gain better visibility on their financial well-being, and make better decisions, including the myriad of Buy Now, Pay Later relationships. They also need access to the right data at the right time, in order to make the best decision possible, not just for now, but also for the long term.

"I work all night, I work all day to pay the bills I have to pay. Ain't it sad? And still there never seems to be a single penny left for me." Money, Money, Money - ABBA

But there are slivers of good news.

Consumers Energy, for example, is contribution $7.25 million to eight Michigan nonprofit organizations to help customers who are facing hardships pay heating bills this winter.

Robinhood, on the other hand, is launching Robinhood Retirement, an individual retirement account (IRA) with a 1% match on every eligible dollar contributed, targeting gig workers and contractors who don't typically have access to an employer-sponsored plan.

As consumers continue to grapple with the reality of economic downturn, what roles can banks and fintechs play?

Perhaps we can start with ... empathy.

____

In this week's One Vision episode ...

From fallen empire to new beginnings, Lamine Zarrad , Founder and CEO of StellarFi ?? , has one of the most unusual stories. And an incredibly inspirational one. Don’t miss this week’s One Vision episode, where Mary Wisniewski and myself chat with Lamine on his banking journey, entrepreneurship, and the fintech promise.

Hint: We cannot change things with just technology.

"On fintech and hope: The American Dream"

Give this episode a listen and let us know what you think.

____

Elsewhere ... here is my latest on banking digital transformation, published via AT&T Business .

The future of our connected world is anytime and anywhere. And that future is already here.

____

Beyond Good is available now on Amazon, Barnes & Noble,?Bookshop.org, Kogan Page and anywhere books are sold. You can check out what others are saying about our book?here.

***