So, what's Cleo got to do with financial health?
It seems to be all the rage for Fintech startups to talk about financial health at the moment.
When I first joined Cleo I went on a bit of a Fintech product binge, downloading and testing dozens of apps to get a feel for the market and the kind of user problems they were solving. I found an interesting pattern: many of the apps mentioned financial health as a driving force behind their mission and vision... yet they never mentioned it in the app itself.
After launching our rebrand, and our new mission to fight for the world's financial health, we needed to make sure that, as a company, we could define financial health – and what exactly it meant for our customers. We wanted something tangible, something we could optimise for, and something we could empower our users towards.
So what does financial health mean for Cleo, what does it mean for the product, and why do we yap on about it SO much?
And what is financial health exactly?
Financial health is a very similar concept to physical health – it's a term used to describe the state of an individual's financial position, and is made up of a number of dimensions.
With physical health, these dimensions include things like your diet, how much you exercise, how much water you drink, and how much sleep you get.
Financial health has similar dimensions. These include your credit score, the size of your short- and long-term savings, how much of your income you spend each month, and how often you actually engage with your finances.
Long story short: financial health isn't static or simple. Much like physical health, it's an accumulation of the activities and decisions you make about your money. It isn't something you can change overnight either. Improving credit scores, building savings, and reducing spending all take time and effort to move and to see an impact – and, for many people, it can take years.
Working with a framework developed by the fantastic team at Financial Health Network, we built a Cleo-ified way to measure the financial health of our customers.
Based on that measurement, we assign users one of five segments:
What's this really mean for the product?
We use this individual understanding of financial health to segment new users when they first join the product. By splitting users into what we think is their appropriate financial health segment, we can guide users towards what we believe is the next most important step towards better financial health.
I use the words "think" and "believe" purposefully here – financial health is not clear cut, and our understanding is limited to the information we can see about a user. Cleo looks at transaction data to help users, but it's not always clear if this is the whole picture. Can we see all their spending, their bills, their loan/debt payments or credit cards? Or have they only connected an account with a partial view of their spending? Without everything, we're only making assumptions based on incorrect data. And that's likely to end in some dodgy decision-making.
So these segments serve dual purposes. Firstly, it allows us to identify where on their financial health journey a user is, which allows us to match them to what their next step could be. For example, users who fall under Surviving or Getting By could have Cleo help them build a budget to track their spending. For many, understanding where their money is going each month is the first step to getting on track.
Secondly, it's allowed us to build up a rich understanding of the financial health of Cleo users coming into the product, and where opportunities may lie to invest in new features and products to serve the underserved.
We want to take this further in the future, creating a measure of financial health that we can track over time, instead of a snapshot view when the user first joins the product.
Look out for my next blog on how we turned this understanding of financial health into a product roadmap to our users, and Cleo, towards success.
If you're interested in joining Cleo, check out our opportunities.