What is Personal Financial Management? What it Means and Why It Matters
February 23, 2024 | 5 min read
Finances are a central part of people’s lives — everyone wants to achieve financial success and be financially sound. But a lot of people don’t know where to start or how to create an actionable plan. And while financial literacy is important, it’s not enough. According to a recent Forbes article, “only 29% of Americans consider themselves financially healthy.” What’s more, the U.S. Financial Health Report found that 43 million Americans or 17% are struggling with most if not all aspects of their financial lives, and 70% are having some type of financial problem.
Simply put, people need actionable and relevant financial advice in the moment they’re going to make a decision, as well as tools to help them easily carry out those actions. Reading about interest rates and investment options isn’t going to help someone who needs to set up a budget. In a recent consumer banking survey we conducted, we found that 25% of people want their financial institution to offer financial wellness tools. What’s more, 93% of respondents said that they would like for their financial institution to send them proactive, personalized messages and alerts that help them manage their finances.
Financial institutions seem to share the sentiment. In a recent bankers survey we found that most financial institutions have financial wellness as a top priority for 2021. However, according to findings from The Financial Brand, while 74% of financial institutions have shifted their focus to customers' financial well-being, only 43% are taking action to emphasize the financial wellness of their customers.
Luckily, technology has come a long way in the financial wellness space. Now financial institutions and fintechs are well positioned to use these tools and innovations to help their customers reach their financial goals and form a more positive relationship with their money. With technology, financial institutions can turn good intentions into an actionable financial strategy. Here are two ways you can help put your customers on the path to financial success.
In a time of personalized experiences and interactions, there’s no place for a one-size-fits-all solution. Now more than ever before, knowing your customers is critical to success. Once you have connected, cleansed, and enhanced data, it’s time to put it to work. The MX Analytics Suite allows your organization to gain insights into your customers’ financial standing, so you know exactly where they are and how to help them achieve their short and long term goals. A holistic approach to knowing your customers will allow you to offer products and services that help them make the right financial decisions as their needs evolve.
Analytics Suite breaks customers into four financial wellness categories — Vulnerable, Building, Stable, and Strong, allowing you to serve each segment's unique needs. Not only that, but you’ll also be able to more effectively focus your marketing budget on products and services that convert. For example, instead of sending out mass messages promoting a product that only 30% of your customers will be interested in, you can segment your customers based on where they are financially and offer them products that will specifically help them. You’ll also be able to see if there are certain products your customers would benefit from that you might not yet have in your product offerings.
With MX, you’ll be able to identify customers:
At the end of the day, finances aren’t static, they change — often. Data is the only way to get a full picture of your customers’ financial lives as they evolve. With data analytics, you'll gain the critical insights you need to provide value-add products and services in every customer communication, helping improve their financial health and strengthen their brand loyalty.
Giving your customers the tools to better understand their own financial situation is just as important as knowing them. The more your customers know about their financial standing, the more proactive they can be about seeking out products that will help them improve their situation. With MX, you can help your customers understand exactly where they are currently so they can take the right steps towards financial wellness.
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