Using Data to Drive Consumer Financial Wellness
May 17, 2023 | 2 min read
Financial wellness is becoming more and more of a focus in 2021 for both financial institutions and consumers. But it’s not always easy to provide a comprehensive financial wellness program or support for customers. Everyone has different needs and is at a different level when it comes to the complexity, understanding, and management of their financial lives. While some are just starting out on their financial journey, others are in the middle of hitting big milestones.
Although financial literacy is a part of financial wellness, it can’t be the only focus. The truth is, financial literacy alone falls short. People don’t want to learn about investment options when sometimes all they need to do is find out how to pay off debt faster.
This is where technology comes in. In order to create a successful financial wellness strategy, financial institutions need to incorporate guided, proactive, and timely insights into relevant and personalized experiences and interactions. In essence, financial institutions need to use technology to fuel financial wellness in actionable ways that are relevant in people’s lives in that moment in time.
Finances are a central part of people’s lives, so it makes sense that it’s often at the top of the list of what they most worry about. Financial stress, however, can often lead to lack of productivity at work, health issues, family arguments, and much worse. Most of us can use more financial guidance. When it comes down to it, finances are complex and often hard to understand. Adding to that, with how busy day-to-day life is, it can be hard for people to sit down and set aside time to manage budgets and track where their money is going every month.
So how can you help your customers start making sense of their finances? One place to start is with guided, proactive advice that gives your customers clarity into where they are at all times in their financial journey. In a recent consumer survey, we found that 63% of respondents said that they’d like for their bank to send them proactive, personalized messages and alerts that help them manage their finances. Financial tools that offer this type of guided advice can help your customers form healthier financial habits. Notifications as simple as overdraft fees or surfacing subscriptions that aren’t being used can quickly help your customers’ take the right action at the right time to avoid getting into financial trouble or stop spending money unknowingly. This type of experience will help transform how your customers view their relationship with your institution from a place of transactional interactions to one of meaningful advice.
In essence, AI-driven financial wellness tools are the GPS of finances — they can help you tell your customers what direction they need to go in to ensure they’re always making the right decisions throughout their entire financial journey.
There are a lot of aspects to finances. Even for someone with a relatively simple financial life, there’s still a lot to account for — recurring bills, credit cards, unexpected expenses, various loans and investments, the list goes on and on. It’s easy for someone to get lost in everything they’re trying to track and overlook or miss something that could be significant. With predictive analytics, you can highlight potential red flags for your customers, helping them avoid getting into financial trouble and spot anomalies that could lead to fraud.
Automated insights, founded on enhanced data, will give you a deeper understanding of your customers, which will enable you to delight them with the experiences they want to have. You’ll be able to automate parts of their financial lives that they don’t have time to manage. For example, something as simple as proactively telling them what debt they need to pay off first to save the most money, or making recommendations on how much to save based on their typical expenses, or quickly surfacing a purchase that was out of the ordinary, will dramatically simplify their lives. This is exactly the kind of experience your customers want and need. In our survey we found that 68% of consumers would like their banking experience to be similar to the experience they have with Netflix, Amazon, and other tech companies that understand their needs and offer recommendations based on their information.
The way we engage with the world is now in micro segments. For example, when we engage with social media platforms we might interact with a post here and there, or send a quick message to a friend, but the interactions are usually brief. Similarly, your customers need a financial feed — a central location where they can view, move and interact with their money in micro segments. By giving customers the information they need to act in the moment, they can more easily prioritize what to focus on and tackle one thing at a time.
With enhanced and augmented data, you can create a personalized feed that includes transactional information, timely notifications, and educational tips specific to each customer’s needs. Essentially, this is a way of breaking down big and complex financial matters into smaller, actionable steps. With technology, you can help your customers make smarter decisions when it comes to managing their financial lives in real time — without the heavy lifting.
As our lives evolve, so does our financial situation. That’s why financial wellness means different things to different people at different points in their lives. Your customers will need guidance, advice, and help all along the way — from their first credit card to their first car to their first house and beyond.
But it’s not always as simple as it sounds. To truly offer data-driven experience similar to Amazon and Netflix, you need to be able to take unstructured data and enhance it so it becomes easily accessible and actionable. Once you’re able to do that, the data turns from historical to predictive — helping power AI and machine learning capabilities that enables you to provide the experiences that meet customers’ expectations no matter where their financial journey takes them.
MX helps financial institutions make sense of their data so they can create data-driven money experiences. With a more integrated and holistic view of your customers, you’ll be able to gain insights into what the right recommendations are for each situation, so you can deliver a guided and personalized experience that helps your customers become financially strong. To learn more about how you can create a data-driven and actionable financial wellness strategy, read The Ultimate Guide to Financial Advocacy.
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