DigitalCFO Newsroom | 15 February 2022
Financial literacy is increasing in society over the last few years. However, literacy alone does not mean that it will secure our future financial management. It means that customers need to be prudent in spending, they cannot stop on the satisfied phase and evolve as a relaxed attitude. If customers take the wrong step, there will be a problem.
For instance, daily financial leaks are driven by impulse while sometimes influenced by indulgence. Social media has cultivated this as people get to follow directly pages with their tastes and preferences on food to clothing thus will fall on a bandwagon of impulse purchases that violate people’s budget. These extra coins may seem harmless yet, a given amount of time amounts to a substantial amount worthy.
The customers should learn to recognize their tendency to spend based on emotions and try to curb that bad practice. Based on a recent survey, 2021 OCBC NISP Financial Fitness Index (FFI) about spending habits Indonesian especially young generation, there are 3 basic financial problems. First, about knowledge of financial concepts. Many people who invest only follow trends without a basic understanding of the importance of risk mitigation. Second, financial management habits. There are still many people who are not disciplined in saving because they are tempted by discounts and items that are not needed. This is a part of people tend to spend based on their emotions. The third, the mindset. As many as 37 percent of Indonesians seem to still define wealth only from material wealth.
“All of us can struggle when it comes to making good financial choices, even those who have high levels of education or are naturally financially savvy. Our natural instincts come into play during these decision times. Regardless of the transaction, whether you want to save for a pension, where to invest your money for a future passive income stream, or the mundane choice to buy a new pair of pants, these everyday decisions can impact your financial life. Your choice could spell the difference between a robust bank balance and monthly money problems,” Amir Widjaya, EVP Head of Marketing & Digital Communication Bank OCBC NISP.
Align with that, as a group OCBC also conduct a survey, OCBC Financial Wellness Index to understand Singaporeans’ financial wellness. It was the first time such a comprehensive study – comprising 10 financial wellness pillars and expanded into 24 indicators to understand Singaporeans’ state of financial health – was conducted.
In 2019, OCBC found Singaporeans were good at saving, having insurance, and sticking to a budget, but lagged in growing their wealth, and worried about their finances. In 2020, the financial strain from the COVID-19 pandemic was reflected in the Index’s 2-point decline to 61 from 2019’s 63. Singaporeans’ ability to pay off loans was affected, and 3 in 4 Singaporeans were not on track to their chosen retirement lifestyles, with 78% of them underestimating the amount needed by 32%. Less desirable financial habits, including speculating excessively, borrowing money from friends and family, and spending beyond their means, increased.
Meanwhile in 2021, OCBC found the COVID-19 pandemic – and its resulting economic impact and uncertainties – has made Singaporeans adopt better financial habits. Many are using digital financial tools to plan and invest, and they achieve better Index scores than those who do not. More millennials are investing to grow their wealth. Singaporeans are also scoring better in retirement, and more are choosing simpler lifestyles for when they retire. Along with the increase of financial management education.
Financial Fitness Solution.
The COVID-19 pandemic and its resulting economic uncertainties have spurred Indonesians and also Singaporeans to pay more attention to financial matters. Thus, the group of OCBC realizes that there are public needs and expectations for the role of banks that carry out the educational function in financial management.
This is particularly due to there is a behavior that the Indonesian people are relaxed when it comes to financial management, which tends to ignore them. The main thing is also because of the low level of financial literacy. It is similar note from Financial Services Authority of Indonesia (OJK) data stated that financial literacy in Indonesia is still low in compare with inclusion. Whereas financial management needs to be made every month so that all needs are properly met according to their portions. By having such habits, the hope is that customers can be more secure in terms of financial protection because the budget for the present and the future has been well planned.
The Financial Fitness solution by Bank OCBC NISP focuses on creating young people with the right knowledge, mindset, and financial habits to have a fit financial condition. The Bank hope that they have a ‘getting fit before getting rich’ mindset. Just like a physical fitness program, being financially fit also requires discipline, commitment, and persistence in striving to change the way people manage finances which are supported by general check-ups, guidance, and exercise from a coach/trainer.
To achieve these indicators, of course, the basic thing is the need to improve financial literacy which is important to learn to be financially literate to lead become healthy financial situation. Indonesian Young generation dominated amounted to 74.93 million or 27.94% of the total population of Indonesia.
“Financial literacy needs to be hand in hand, thus, having a creative approach is needed to get our young generation to take the first step as their moment of truth. To start the habits early on, the Bank has designed products that are affordable and manageable called #Save20 program (a mutual fund that starts Rp.20 thousand or equivalent of 1,91 SGD and regular savings program Rp.20 thousand),” Amir added.
In one of the recent activities, Bank OCBC NISP launched Financial Fitness Gym by Nyala OCBC NISP, to change the public’s perspective on Bank branch offices. The Bank wants to become a game-changer to drive people’s perceptions and behavior.
Financial Fitness Gym by Nyala OCBC NISP is open for public. Located in the mall, customers are welcome with a Trainer (Nyala Trainer) where their role is to assist customers on how to be #FinanciallyFit, and also a buddy (Nyala Buddy) served as a mentor to help them plan on them with their financial journey. Furthermore, like any other gyms, the FFGym has also provided with financial classes which are map based on their financial health. Currently, FFGym has more than 80 classes on various topics, accessible offline and online, which also means that everyone in Indonesia can also be part of the Financial Fitness program virtually.
Amir also added “Member of FFGym is free. Everyone who comes to our branch or register online can participate in the financial courses that we plan, consult with our trainer and coach,” Amir said, “We aspire to make Young Indonesians to become #FinanciallyFit and a trendsetter in driving positive behavior for other young generations.” Financial Fitness Gym by Nyala OCBC NISP is a destination of where people should go, a guide on how to manage finances.