Aligning Customer Financial Health with Business Growth

Amid ever-changing and complex individual financial circumstances and larger economic forces, nearly two-thirds of people in the US struggle with at least one aspect of their financial lives.[i] And as they try to navigate through this, they are looking for financial health support from their financial institutions (FIs). In fact, nearly 80% of banking customers would like their FIs to support their financial health, yet only 14% think their FIs are doing so.[ii]

There’s a real benefit for FIs to close this expectation gap and deliver on financial health for both the customers and the business, because customers that feel supported are more engaged, loyal, satisfied, and hold more products at those institutions.[iii]

What’s financial health?

Financial health is a holistic picture of the various aspects of one’s financial life, i.e., how spending compares to income, how much liquid savings someone has available, a person’s credit score, and the extent to which that person financially plans, etc. Sound financial health happens when people can fully meet their current financial obligations, future financial obligations, and demonstrate resilience when unexpected expenses occur.[iv] Or as Commonwealth Bank puts it, “to thrive every day, one day, and during a rainy day.”[v]

Delivering on financial health can also be an FI’s competitive differentiator as challenger banks and fintechs continue to increase their share of the market and provide even more alternatives for customers.

Below are three ways FIs can embark on this journey:

1. Tailor the right message to the right audience – Some customers may feel miles away from achieving financial health and will need support and a road map to do so, whereas others may need help with maintaining and further improving their financial health. Segmenting your target consumers will help you to define segments that are aligned with your company’s mission and goals and will reveal enablers and barriers as drivers of consideration.
2. Personalize the customer experience to better meet their needs – Help customers take inventory of their financial health through financial health measurement.[vi] This will provide a complete picture of one’s finances, highlight pressure points, and identify the next steps on their path to financial health. A deep dive into segments of interest will uncover unmet needs and wants, current financial behaviors, along with drivers of product and brand consideration. Deeper segment knowledge will enable you to custom-create not just messaging but product offerings as well.
3. Close the intention-action gap – Many of us have the best of intentions for improving our financial health, but it’s often tough to do. Uncovering how to make it easier for customers to utilize existing and new products and services that support their financial health, is essential for business and personal customer growth. One way to do this is to utilize qualitative UX and Habit Loops research. Through UX work, your FI can identify ways to simplify experiences and make them more rewarding for consumers engaging with your brand. Identifying the most important habits and making these loops easy and rewarding creates sticky habits which keep your consumers coming back to you as part of the financial health journey.

Looking to identify how you can make financial health your company’s key differentiator? Contact us today, and let’s start the conversation.

[i]Andrew Dunn, Thea Garon, Necati Celik, and Jess McKay. 2021. “Financial health Pulse: 2021 Trends Report.” Financial Health Network.

[ii] Stephen Arves, Marisa Walster, and Nadia van de Walle. 2019. “Building Valuable Customer Relationships Through Financial Health.“ Financial Health Network.

[iii] Rebecca Riffkin and Areen Jalajel. 2015. “Customers Want Banks to Improve Their Financial Well-Being” Gallup.;  Stephen Arves, Marisa Walster, and Nadia van de Walle. 2019. “Building Valuable Customer Relationships Through Financial Health.“ Financial Health Network.

[iv] CFPB. “Financial well-being resources.”

[v]Commonwealth Bank. “Improving Financial Welling & Applying Behavioural Science.”

[vi] For more on financial health measurement with administrative data see here or here and for more on financial health survey scoring see here or here.