If You Do One Thing This Year, Add Financial Wellness Tools to Your Digital Banking Experience

After the year that was 2020, it’s understandable that many of us are still reeling, pondering the best path forward for our financial institutions in 2021. The pandemic has changed seemingly everything about the way we do business, causing bank and credit union leaders to place their focus for the new year on topics like digital transformation, customer trust, financial equity and the importance of innovation, to name just a few. 

While these particular strategies are certainly worthy of including in your 2021 roadmap, there is one solution that approaches them holistically, in addition to tackling what’s on many of your customers’ minds this year: banks and credit unions that incorporate financial wellness into their digital banking solutions will strengthen both their customers’ and their institution’s bottom lines.

What does this look like?

Timely, personalized and in-app recommendations that provide guidance related to payment decisions, spending, debt management, financial products and more. These days, your customers are looking to get more from their bank: they want a true partner to guide them in their financial journey. By layering in financial wellness tools directly into your digital banking experience, you can help customers navigate the often difficult decisions they are faced with on a regular basis, meeting them where they are both literally and figuratively. 

With so many areas to focus on, why financial wellness? Why now?

1. The Impact of COVID-19

Very few have been left financially unscathed by COVID-19, with many experiencing unemployment, low wages and fewer hours that result in the disappearance of paychecks and ultimately, the depletion of savings accounts. Those who might have been considered financially secure prior to the pandemic now have a much less stable grasp on their finances for the first time in their life, while people who were already struggling are under even more stress. 

Both groups could hugely benefit from a trusted partner guiding them through the many, often confusing, financial decisions to make the most of every dollar during this difficult time. The pandemic is demanding more of traditional financial institutions and causing them to reevaluate their priorities; those that close the loop between technology, data and the humanity of their customers to affect actual change will adapt to the times successfully.

2. Financial Institutions are Prime Wellness Partners

Banks and credit unions make natural financial wellness partners for their customers in a number of ways. First, they have the advantage of the implicit trust customers have placed in them to safeguard their assets, and can leverage it to further guide them through the active management of their money. This trust, paired with the financial data provided by customers, will allow banks “to deliver value from insights….a focus on financial well-being, through advice and in refining products for consumer needs, will define leaders,” according to the Forrester report “The Future of Banking is Built on Trust.”

Next, while other larger institutions are just starting to understand the value of contributing to the common good, advocating for the best interest of the customer has always been inherent to the mission of credit unions and small banks. They should take this opportunity to double down on this commitment, providing even more resources for their customers in this critical year. If banks and credit unions lean further into this initiative by expanding upon the offerings they already have and package them in a way that optimizes and improves their customers’ financial performance, they can capitalize on their position of leadership in this area.

3. Mile-High Customer Expectations

We’re living in the age of Amazon, Uber and Grubhub, a time in which customers are used to getting their wants and needs met with a few clicks in lightning speed. For better or worse, those expectations extend to every aspect of their lives, and banking is no exception. Your customers expect a fast, intuitive experience that does the thinking for them and anticipates their specific needs. By giving you their business, customers are increasingly expecting you to provide a full service financial experience complete with personalized recommendations and the timely, subtle nudges of a financial assistant… because if you don’t, someone else in the industry (or an entirely new player from the outside) will. We all know the Apples and Googles of the world are always one step away from offering what your business promises, backed by their resources. Earn your customers’ loyalty before these players get the chance by delivering the experience they’re looking for now.

4. A New Emphasis on Social Responsibility

Another major trend shaping how customers choose their bank is the rise of corporate social responsibility. While this was previously a “nice to have,” it is now considered essential for companies to actively use their resources to benefit a greater purpose.  “Increasingly, consumers are becoming attracted to brands that align with their own values. Empowered consumers are driven by an insatiable need to make their lives, and the world they live in, better,” as described in “The Future of Banking is Built on Trust.” People want to know that their efforts are being optimized, and that the brands and products they choose are working for them. 

As it translates to banking, customers want to do business with an institution that prioritizes their financial health and proactively ensures they are managing their money wisely, whether they’re deciding how much to pay toward their credit card bill or figuring out which mortgage is right for them. A recent report by Filene Research Institute echoed this factor, indicating that second to payment capabilities, the inclusion of financial wellness resources in their banking solution was most important to customers. 

5. The Rise of Neobanks, Fintechs and DeFi

Until recently, it was small banks and credit unions that played the “scrappy start up” role according to Biztech Magazine; now financial institutions big and small share a common competitor in fintechs, who offer their customers a variety of innovative products with minimal fees and other low barriers to entry. Today there are countless finance apps out there, luring customers away from your digital banking solution in favor of their sleek interfaces and robust feature sets. This shift is problematic, especially as customers are increasingly placing their trust in these startups. Customers no longer bat an eyelash at the thought of sharing their data or trusting their nest egg with a new app.

The appeal of DeFi (short for “decentralized finance”) has also gained steam. As of our writing today, there is over $23B in assets sitting in decentralized products ranging from lending, borrowing, trading and insurance. While still nascent, developers from across the globe are rewriting how banking will be done in a Web 3.0 world. 

However, banks and credit unions have the advantage of their preexisting relationships and customer-focused mission they can use to hold on to this business. If banks and credit unions introduce the financial wellness tools their customers seek into their digital banking solutions, they will be able to further model their missions, creating financially healthy and loyal customers that don’t need to shop your competitors. 

Win With Wellness

The benefits of integrating financial wellness tools into your digital banking solution extend beyond those mentioned above. First, it’s important to not overlook the massive impact such a move has on your organization. According to The Financial Brand, introducing technology that embodies your institution’s values allows employees to gain a deeper understanding of the business’ mission, which inspires increased creativity, focus and innovation and ultimately leads to higher employee retention, quality recruitment and better workplace culture. Not to mention that similar to acquisition costs for new customers, it is typically significantly cheaper to hold on to employees than spend the time and money to hire new ones.

Lastly, it is essential to note the incredible effect investing in the financial wellness of your customers can have on your business. Customers who are stronger financially can take advantage of the products and services offered to them by their bank or credit union, creating a cycle that benefits both parties. Furthermore, institutions that take care of their customers throughout their financial journey earn their trust and recommendation, resulting in greater retention and more members. 

In summary, while the demands of the last year have certainly given the digital banking world much to reflect upon, it’s clear that now is the time for financial institutions to include the wellness tools their customers want and need in their digital offering. This addition is not only a natural evolution of the banking experience, but a symbiotic way to combat the effects of the pandemic, as well as the surge of nontraditional competitors. Banks and credit unions can be confident that this development is aligned with their values, and should leverage that position in this initiative amidst a rise in corporate responsibility. The positive effects these tools can have on your customers’ financial health, your organization’s workplace culture and your customer retention are innumerable. What starts out as something as simple as an integration or feature request can end up benefiting the customer, employee and institution tenfold.

Want to learn more about Project Finance’s suite of wellness tools, or how to integrate financial wellness into your digital banking solution? Email us at info@projectfinance.io; we’d love to hear from you!


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