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Creating a Digital Banking Platform That Supports Your Members’ Financial Wellness

Banks and credit unions have a real opportunity to fill an important need for their users. More than 50% of U.S. citizens say they are not financially healthy. That need has only gotten worse during the COVID-19 pandemic and the instability that came with it. Only 44% of American households consider themselves financially healthy. This term is defined as adults who live with the stability of income exceeding their expenses — they are fully able to meet basic needs such as paying bills on time, having a savings reserve and having necessary insurance coverages (health, auto, life, property, etc.). This leaves the majority (66%) in varying stages of financial stress and instability.

This problem is actually an opportunity that is well-suited for proactive banks and credit unions because there is significant interest among users in receiving advice from their primary financial provider. With pandemic lockdown restrictions and digital banking transformations, not everyone is interested in the standard, in-person solution to diagnose their financial wellness — or lack thereof. Ultimately, your end-users want more functionality out of your banking app to build peace of mind and knowledge to deploy your specific suite of solutions.

Be the Calm Within the Stress

The COVID-19 pandemic compounded financial and health-related stress felt by tens of millions of the U.S. population. Banks and credit unions can be the oasis within their “financial-stress-deserts” by providing more than just a banking app that shows balances and sells standard-fare financial products. According to an October 2020 study by J.D. Power, 83% of Americans are very interested in receiving advice or guidance from their primary retail bank or credit union. Being able to provide your users real-time recommendations specifically related to their needs will greatly enhance your financial organization’s ability to be a key player in their financial wellness.

Good for Users, Good for You
Effective banks and credit unions leading the charge of financial wellness digitization have tools and capabilities that send dollars and real value back to end-users. For example, these advantageous mobile apps can notify your users of duplicate subscriptions, help them avoid overdraft fees, provide low-balance alerts, track how much money they have compared with established spending patterns and help keep them on budget.

The Need Is Real

In the J.D. Power report, 33% of U.S. citizens surveyed said they did not have enough cash to cover living expenses, and 58% said they had enough money on hand to cover a $500 emergency. There is evidence of a correlation between physical and financial health, according to a 2019 U.S. Financial Health Pulse trends report from the Financial Health Network. It consisted of a composite of eight metrics including savings and credit scores that gauge personal financial health on a scale of 1 to 100. Individuals whose health improved over the previous year had an average increase of 1.8 points in their FinHealth scores. Those who reported a decrease in health or had a major medical expense saw their scores fall 3.3 points on average, according to the study.

This suggests that the guidance your bank or credit union provides could physically impact your members. Consider providing proactive advice that gives members clarity based on where they are in their financial journey. Financial tools that offer this type of guided advice can help them form healthier financial habits and strengthen their bonds to you.

More Solutions, Deeper Relationships
It’s relatively easy for a user to get mired in all the financial obligations and expectations they’re trying to track and accidentally overlook something that could be significant. With predictive analytics, banks and credit unions can highlight potential warning signs for their users, helping them avoid financial trouble and penalties.

Your financial institution can potentially create a personalized feed that includes transactional data, real-time notifications and educational tips personalized to your user. By chunking down these bigger, complex financial problems into more manageable bite-sized, actionable steps, you can engage with your users on much higher and faster levels. Focusing on serving financially stressed end-users will build strong brand loyalty for your branches and brand.

Shared Control of Their Financial Wellness

Financial well-being is the goal and destination of your users. However, the paths are often unclear and downright scary for many. Your financial organization can benefit significantly by understanding your user’s financial behavior and unlocking greater long-term value in the process. Your users want to share the control of their financial well-being with you — through personalized data-backed guidance from your digital or analog channels.

Redefine your user’s experience. Place their needs at the top of your priority list when it comes to your digital banking platform spending. From simple balance checking to custom, complex wealth management advice, end-users expect product and service accessibility from any and all digital devices — in real-time. When implementing new services into your operations with extensive legacy processes, consider established and agile digital banking platform partners to remain relevant or competitive.

As your users’ lives progress, so does their financial situation. Consequently, financial wellness can and will look drastically different from member to member. Nearly all end users would benefit from solid and customized financial guidance. Banks and credit unions have a distinct advantage over many of the upstart fintechs because of the legacy of trust already built. If you can offer a data-driven experience using AI and machine learning capabilities, you can provide effective experiences that meet your members’ expectations regardless of where their financial journey leads them.

Marty Aquino has been a passionate writer on venture capital, technology, forecasting, risk mitigation, wealth and entrepreneurial topics since 2009. He is the founder of Carbonwolf Energy, a venture-capital firm specializing in world-changing and status-quo-defying technologies and people. 

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