How Financial Institutions Can Add Value
About a 2 min. read
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:
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.