Summary
In today’s complex financial landscape, understanding the unique financial well-being of service members, veterans, and their families is crucial. USAA uses a financial health framework—a sophisticated model designed specifically to quantify the financial health of its distinctive clientele across three critical dimensions: Stability, Resilience, and Security. By leveraging this framework, USAA gains unprecedented insight into the financial health of service members at every stage of their careers—from active duty to veteran status. These insights empower USAA to develop targeted policies, products, and services that further its mission of enhancing the financial security of those who serve our nation.
This financial health framework is grounded in the OCC’s Financial Health Vital Signs methodology and is built on three key pillars:
- Stability: The ability to manage day-to-day finances and meet obligations.
- Resilience: The capacity to withstand financial shocks and handle adverse circumstances.
- Security: The confidence in one’s future financial well-being.
These pillars are evaluated using a comprehensive set of indicators, allowing for nuanced, holistic comparisons between different segments (e.g., service members vs. non-service members) and benchmark populations (e.g., the average US population).
OCC Guidelines and Financial Health Considerations
The OCC advises banks to:
- Support the financial health of customers and communities.
- Understand customers’ financial challenges.
- Explore opportunities to offer responsive products and services.
- Take additional steps to help customers improve their financial health.
OCC defines an individual or household’s financial health as a state that enables:
- Stability: Managing day-to-day financial obligations.
- Resilience: Withstanding unexpected financial shocks.
- Security: Feeling confident about the future.
Comparative Analysis & Filtering
The framework’s scoring and indexing methodology allows for meaningful comparisons between various segments. In addition, it supports filtering based on a wide range of demographic and geographic factors, enabling tailored insights and decision-making.
Methodology
The financial health framework categorizes indicators into three distinct groups based on their relative importance and impact on financial well-being:
- Critical Indicators (50% weight):These represent the most significant factors directly influencing an individual’s financial health. They are aggregated using appropriate statistical methods and normalized to a common scale to ensure comparability.
- Supportive Indicators (30% weight):While not as influential as the critical indicators, these metrics provide important context and nuance, enhancing the overall assessment of financial health.
- Contextual Indicators (20% weight):These offer broader environmental or situational insights that, while not directly impacting day-to-day finances, help frame the overall financial picture.
Within each category, individual indicators are:
- Aggregated: Using weighted averages or composite scoring based on the nature of the data.
- Normalized: Adjusting values to a common scale (e.g., 0–100) to ensure comparability across different metrics (e.g., dollar amounts, percentages, or ordinal rankings).
- Rolled Up: The normalized values are then combined into a single score for each category by applying the respective weights (50% for Critical, 30% for Supportive, and 20% for Contextual).
This systematic approach—encompassing aggregation, normalization, and weighted roll-up—delivers a sophisticated yet clear assessment of financial well-being. It captures the multifaceted nature of financial health while providing actionable insights at both the category and individual indicator levels.
