Financial wellness in the U.S. is plummeting. Here’s how banks and credit unions can step up to help – TechToday

consumer financial health in the U.S. deteriorates at a rapid pace, banks and credit unions have an opportunity to do so much more than simply holding customer money. More than ever, financial institutions (FIs) need to engage customers and members with
comprehensive and targeted services that actually help them grow their wealth and improve their financial security. 

Here’s why. 

More households are
living paycheck-to-paycheck, with
little recourse in the event of unexpected costs like a medical emergency or car repair. Credit card debt

is ballooning. Retirement accounts
are dwindling. And despite inflation cooling, there is still
intense consumer anxiety over elevated prices. All of this is compounded by higher interest rates and a general uncertainty about the future of the U.S. economy.  

There’s a disaster brewing that threatens to throw many consumers deeper into financial disarray. Yet despite all of these challenges, just 25% of U.S. adults would seek advice or help from their bank or credit union, according to a recent

NFCC report. 

Think about that. The very entities that are tasked with holding a customer’s money are not the same ones that customers would turn to in order to manage that money better. This is not for a lack of interest, either. In fact, 75% of consumers say they would
value professional financial advice, per
another NFCC report.

The biggest challenge for banks and credit unions in shifting this narrative is figuring out how to build effective financial educational programs that meet the unique needs of each customer or member. To solve this dilemma, institutions must embrace modern
technology that allows them to tap consumer data to drive greater personalization.  

Bridging the gap 

Financial wellness means something different to everyone. 

A bank might consider how well an individual’s overall portfolio is doing: Are their savings adequate? Are their investments all paying off? Is there a budget in place?  

Meanwhile, a customer or member might define financial wellness as simply being able to understand how money flows in and out of their account on a monthly basis. They may not want a professional hounding them to completely change all their financial behaviors.
Instead, they may be fine with one or two small goals, like: Can I start to save $100 a week based on my current spending patterns? 

Often, that gap in the definition is one of the biggest reasons why consumers avoid working with banks and credit unions on achieving financial goals. And it’s why personalization has become so important. Knowing the individual goals of each customer makes
it much easier for FIs to meet them where they are – ultimately giving individuals the support they need to take more aggressive steps toward their own version of financial wellness.   

Start early, touch base often 

From the very first interaction, banks and credit unions should be seeking to understand what financial wellness really means for each person or family. 

To achieve this, institutions may include questions to gauge an individual’s current financial health and goals during the onboarding process. Then, once they become customers or members, banks or credit unions can use that information to create a dynamic
customer profile that includes suggestions tailored to unique needs. For example, if saving money is a top priority, the institution should recommend the most appropriate high-yield savings account. Or if someone has high credit card balances, the bank or
credit union should suggest tools to get debt under control. 

However, as is the case with anything, financial needs can change quickly. That’s why a digital platform is so important – it allows for scalability without disruption. Banks and credit unions need to be able to constantly harness consumer data to create
“living” profiles of their customers that evolve as they do. Take an individual that wants to save money. After getting their deposits to a certain level, the bank or credit union might get an alert and be able to reach out to that person to discuss how diversifying
their savings could actually increase the returns even more. 

Focus on the experience 

No matter how much financial acumen a bank or credit union might have, a bad customer experience will drive individuals away. Users shouldn’t have to wade through several different applications or websites to find the right financial wellness tools.

Instead, they should be embedded in every digital interaction a customer has with their bank or credit union. Then, as more people tap those services, the programs can use the insights from those interactions to improve their future recommendations, products
or services. And customers should have optionality. For example, the Bank of Oklahoma offers human or digitally-managed wellness programs. 

Ultimately, digital wellness tools and modern platforms with the ability to scale can help instill loyalty among FIs’ existing customer bases, as well as help banks and credit unions reach a range of new customers. And using data to drive the experience
means each user will feel like they received personalized service. 

While banks and credit unions alone can’t solve the financial storm that’s brewing, they can shift the narrative to become the go-to source for financial needs beyond traditional banking. With the right infrastructure and processes, they can play a vital
role in helping consumers better understand their unique path to financial wellness — then give them the tools to get there.


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