Knowledge as a catalyst: Strengthening financial resilience for employee well-being
In today's fast-paced and interconnected world, financial literacy has become essential for individuals to navigate the complex landscape of personal finance.
As we continue to tackle the ongoing global economic crisis and recover from the COVID-19 pandemic, money worries are a contributing factor to the mental health challenges faced across Southeast Asia; according to recent research by global market intelligence firm Mintel, about
Financial challenges are not the only contributing factor to poor mental health, but they significantly impact the individuals concerned and the organisations they work for.
Financial Stress and Its Impact
The correlation between financial stress and mental health issues, such as depression and suicidal thoughts, is undeniable. In fact, studies in the US have shown that 46% of people with debt also have a mental health diagnosis.
Additionally, financial stress leads to decreased productivity, poor work quality, strained team relationships, and high employee turnover rates; research has revealed that workers with financial stress are twice more likely to look for a new job and five times less productive.
The consequences extend beyond the individual, affecting employers who bear the burden of increased costs, such as overtime for remaining employees, recruitment and medical expenses.
Targeting the Underserved
A study conducted by Google, Temasek and Bain & Company in 2019 indicated that over six in 10 Southeast Asians could be described as underbanked or unbanked. Individuals in these groups may have a bank account but often rely on alternative financial services. Some do not have a bank account at all.
Within these under and unbanked groups, other subgroups, particularly low-wage workers, daily workers, first jobbers, and students are disproportionately affected by financial stress. Students, in particular, face immense pressure with studies, and financial problems often exacerbate their stress levels; for example, only a mere 3% of students have access to bank loans. This is where employers can make a difference by focusing on students, as they are the future talent pool.
Similarly to first jobbers, many workers who earn minimum wage and live paycheck to paycheck need help obtaining credit from formal financial institutions due to having limited financial history. Hence it is no surprise that financial issues are the number one cause of stress for low-wage workers, one in five (21%) of whom said that the stress negatively impacts their performance at work.
The Path to Financial Resilience
There are many causes of financial stress. However, the root causes are often a lack of knowledge, savings discipline and access to resources, which causes the downward spiral of a debt cycle.
Empowering employees in these underserved groups with the tools to achieve financial stability is vital to breaking the cycle of financial stress. Solutions must be created and made available that provide comprehensive support and education, enabling employees to make informed financial decisions.
Technology can play a vital role in improving financial resilience in Thailand and other Southeast Asian countries. Mula-X, a fintech built by bankers that focuses on providing financial products to the underserved segment, is one example of how technology can support such solutions. Mula-X has harnessed advanced mobile app technology, alternative data models, APIs and cloud infrastructure to create an ecosystem that enables the underserved and underbanked population to access financial services quickly, easily, and cost-effectively.
It goes without saying that employers also play a pivotal role in this journey. When employers recognise their responsibility to ensure employees' physical well-being through health insurance, it makes logical sense to also show an interest in financial well-being, considering the significant impact it can have for both parties.
Financial well-being can be supported by working with fintechs such as Mula-X, which provides employers with solutions to help ease employee financial stress by enabling access to emergency funds as and when needed, as well as accessing tools for better financial knowledge, savings discipline and decision making.
Ultimately, financial literacy acts as a catalyst for change, transforming the lives of individuals and organisations alike. Business leaders should be taking the reins and finding systems that provide employees with the means to achieve lasting financial resilience and unlock their full potential. It is the right thing to do as an ethical and responsible employer, and it just makes good business sense.
