There are few things more human than money. And, few things that draw out more emotions in our lives — happiness, anxiety, elation, depression, excitement, stress, hope, fear, etc. Over the last few years, these emotions have been amplified by a global pandemic, record-high interest rates, soaring credit card debt, bank failures, and a looming recession.
“We all want to be met with curiosity, not judgment. We want empathy, not power over. And, we want compassion, not shame,” —Tammy Lally, TED Speaker and Author of Money Detox
And, for banks, credit unions, and other financial providers, the challenges and opportunities are real. How do you grow deposits and improve engagement in the face of increased competition, regulatory expectations, and increasingly more demanding consumer expectations? How do you deliver faster, better, and cheaper products and services in the midst of aging infrastructure, explosive growth of AI, and higher risks of fraud?
At this year’s Money Experience Summit, more than 400 banking and fintech leaders gathered to talk about the challenges, opportunities, and innovations ahead for our industry. Let’s take a look at our top takeaways that can inform your 2024 playbook to create personalized digital and mobile banking experiences that improve engagement, increase deposits, and drive meaningful outcomes for both your business and customers.
1. The New Definition of Primacy.
There is no such thing as a primary financial institution today — or at least not by traditional standards. In a world where each consumer has an average 5 to 7 financial accounts with different providers, leaders at top financial institutions and fintechs are changing how they define primacy within their organizations. It’s no longer about direct deposits, payment activity, or the number of products and services a consumer has with a particular institution.
Instead, primacy is in the eye of the beholder. “...Eyeballs, right?,” said Jordan Wright, CEO and co-founder at Atomic. “Do they check our app every day for everything that's going on, or are they going somewhere else?”
In other definitions, the words “lifestyle brand” comes to mind. Customers want to associate themselves with a brand because it's a reflection of their lifestyle today or maybe where they aspire to be in the future, according to Anthony Termini, Senior Vice President of Business Development at Morningstar.
But no matter what, the definition of primacy today is about engagement. In fact, digitally engaged users are three times more likely to stay with their financial providers than those that are not. Additionally, those who provide financial wellness tools see 40% more monthly logins and 175% increase in mobile sales per user.
So what does that look like? Chancze Lepore, Senior Vice President, Digital Account Opening and Onboarding, at U.S. Bank believes the first few weeks with a new customer can set the tone:
“... If you do that right over the course of the first couple of days and weeks, then you've earned the right to then deepen the relationship based on either explicit information they've told you about them, or implicit information that we pulled from data and insights.”
2. Brilliant at the Basics.
We’ve talked about the need to focus on reliable functionality over flashy features in the past. And, that remains true.
But, being brilliant at the basics isn’t easy. It means meeting the correctly high expectations that consumers have when it comes to dealing with their finances, according to MX Chief Technology Officer Wes Hummel. It just has to work all of the time. Full stop. That means products and services are:
- Available: Services need to be available when consumers need them, all the time, every time.
- Reliable: The experience needs to work the way it’s supposed to work.
- Scalable: Services need to be able to grow as consumer demand and adoption increases.
- Secure: Systems and the personal consumer financial data must be protected.
And, when asked where they want the most help, consumers want to understand the basics. MX research found that when asked what question is most important for them to be able to answer when managing their finances, the top questions to answer are:
- How much can I put towards debt or savings? 22%
- Am I spending more than I should? 21%
- How can I cut expenses? 17%
“Someone who's just after everyday management of their household finances is thinking of six or seven outcomes, right?,” said Casey Reynders, Senior Vice President, Director of Consumer Product Strategies, Umpqua Bank. “I want to pay my bills on time. I want to set aside some savings. I don't want to overdraw or have any other penalty fees. I want to communicate adequately with everybody in my household, so on and so forth.”
3. If You Build It, They Might Come.
“... Some of you may remember the movie Field of Dreams — ‘if you build it, they will come.’’ That's not true with the digital channel,” said Emory Mayfield, Chief Consumer Banking Officer, Hancock Whitney. “It’s ‘if you build it, you still have to teach them and then, they may come.”
This means being conscious of time and resources spent to build new features relative to how much is spent on driving awareness. “Sometimes those things get out of balance so you end up with 400 features that nobody knows about, which is pretty useless,” said Damian Warren, Senior Vice President, Head of Consumer Digital Channels, U.S. Bank.
So how do you strike the right balance between investments in building technology to meet customer needs and driving awareness for adoption and engagement? Here’s a couple things to consider:
- Educate your own teams first. “The game changer was realizing that it all starts with our associates. If we get our associates to buy in, then they will go and teach our clients how to do it, and they'll get passionate about it. But first you have to train them and they've got to get confident,” said Mayfield.
- Focus on ability, not functionality. Research presented by Rebel found that a consumer’s own perceived ability to manage that product or service is what initially causes them to engage — and keeps them engaged over time. Bottom line: If you can convince consumers that they can do this, they will do it.
4. Financial Wellness is a Feeling, not a Finish Line.
Earlier this year, we asked 1,000+ consumers what financial wellness means to them. Comfort. Security. Balance. Stability. Peace of mind. While the answers ranged, one thing was clear — financial wellness is more than just being able to pay bills. It’s not a finish line or a goal to achieve. It’s about being able to live without worrying about money.
“We believe that financial wellness is a matter of health, not wealth. It’s a process, not a singular event. And so for that reason, we place a large emphasis on empowering our members to learn as much as they can, absorb as much as they can, and then apply that to their daily lives,” said Whitney Queen, President and Co-founder, Mentoro.
According to Leah Hacker, CEO of Rebel, when we talk about products and services within the financial industry, one rule remains: people are not logical. In fact, even when we believe we're being objective, we're actually not. Rebel’s research found that those who feel good about or believe in their power to manage the money, feel better about actually managing the money. That feeling can and should be a powerful driver for personal financial management (PFM) tools.
Some PFM tools fail to take the emotional side of finances into account, delivering data that the consumer doesn’t know how to act on or pushing alerts and notifications in an impersonal or incessant way that can make people feel annoyed, exhausted, or just worse. Sometimes, it causes them to simply shut down. Psychologists call this “financial avoidance” and it has led to an increase of 29% year-over-year for average credit card debt among Millennials and an increase of 40% for Gen Z.
What to do? Budgeting and PFM tools shouldn’t just be a reminder of how far behind consumers may be on their financial goals. Financial institutions should focus on balancing reminders with reassurance and support to create a better experience.
In addition to reassurance and positive reinforcement, financial providers shouldn’t assume that consumers know what to do — and that they’ll actually do it. It’s not just about reporting account balances but influencing behaviors. Changing behaviors is hard and without actionable guidance, consumers often don’t even know where to start. That’s why it’s important to:
- Make it understandable. When consumers come to a site or app, they want data that’s insightful and understandable — with the least amount of effort required on their part. Transaction data should be cleansed and classified into simple, understandable descriptions, making it easy for consumers to identify, organize, and act on their financial data.
- Make it obvious. Consumers have less patience than ever for sub-par experiences and overly complicated processes. Minimizing the steps — or searching — required to find information or take action is essential to driving high adoption and engagement.
- Make it predictable and repeatable. By delivering insights in a predictable and repeatable manner — and if the content is obviously and reliably valuable and actionable — PFM solutions can create lasting engagement and healthier financial habits.
“We almost classify financial wellness as a feeling. How does a customer feel about their financial situation?” —Jo Briggs, Director, Partnerships, Moneyhub
5. Balancing Technology and the Human Element.
As technology becomes more readily available, there is tremendous opportunity to create a more level playing field across the financial industry. The power of generative artificial intelligence can enable companies both big and small to develop and offer services and capabilities that they would never be able to do before, according to Karen Webster, founder and CEO of PYMNTS.com.
However, AI is only as good as the data it receives, which can lead to putting people into boxes. But we’re more than a set of data points or biases. The future of AI will depend on how we teach it. “Now, computers and systems are not biased. They go with whatever we feed them,” says Omar Hatamleh, a renowned AI expert, co-author of Between Brains, and Former Chief Innovation Officer, Engineering at NASA. “...These systems are learning from us and evolving and mimicking a lot of the elements and intricacies that we do.”
MX CEO Jim Magats asks the key question: Will technology lead us? Or, will we lead technology? He believes that by combining the best of technology with the human element, we can create truly powerful money experiences. Human-led technology can ensure:
- Consumers are recognized as individuals, delivering a personalized experience that doesn’t treat them solely based on a demographic.
- Financial insights are embedded into everyday experiences, meeting customers where they are and adding context to raw transaction data.
- Consumer’s financial lives are enriched by actionable intelligence, not generic data points.
6. Real-Time Payments Means Real-Time Fraud.
Fraud is already at an all-time high. And, the evolution of the digital payments landscape, including the recent launch of FedNow, creates additional opportunities for risk. The bottom line is as technology becomes faster and more sophisticated, so do fraudsters. Gone are the days of scam emails riddled with misspellings and obvious signs of fraud.
“Fraudsters are some of the most creative entrepreneurial people,” says Trisha Kothari, CEO and Co-founder, Unit21. “…They have to constantly evolve their practices. And the first adoption of the newest advances in generative AI that we have seen at Unit21 is by fraudsters.”
To drive broad adoption of real-time payments and FedNow, the financial industry needs to tackle how to manage fraud within the ecosystem first. Here’s a few things to consider from our panel of payments and fraud experts:
- Establish real-time fraud reporting as an important foundation for instant payments.
- Employ identity and event validation on both sides of that payment to ensure payments are initiated and received by the right people for the right events.
- Leverage open banking APIs to create a more seamless, secure environment for payments. “With APIs, you can not only get confirmation of payment, but you can actually put in flexible fraud tools ahead of submission of the payment to the network,” said Bradley Wilkes, CEO, Open Payment Network.
7. The Need for Actionable Intelligence.
The money experience needs to be more than just easy. It needs to be intelligent. It needs to be personalized. And, it needs to be actionable. It needs to connect customers to their data in a way that enhances their financial lives.
Vast amounts of transaction and customer data are generated daily. In fact, more data than ever is being generated and it tells us everything we need to know about customers: how they spend and save, their financial goals, their location, and more. But, in the end, data is just data. You need to create an actionable step for your customers. That's the most important thing.1``
When that data is combined with machine learning and artificial intelligence, it holds immense potential to drive innovation and growth.
MX powers end-to-end solutions that enable financial institutions and fintechs to connect to, drive engagement, and act on consumer-permissioned financial data. We’re working to improve the money experience through each touch point, from acquisition to engagement to growth. For example, let’s look at personalization at scale.
Making sure you get the right message, to the right person, at the right time, and at scale, isn’t all that easy. Marketers have multiple platforms that are designed to help, but if they want to provide a better experience, they need to know their customers. But, there is a lot of data out there that is either outdated or difficult to understand. This impacts the level of personalization financial institutions are able to provide, and the success of campaigns and programs.
With a holistic view of your customers and how to best engage with them, marketers can build smarter segmentation, improve engagement and retention, and better understand the competitive landscape. MX clients who are using this intelligent data in marketing campaigns have seen:
- 3x increase in new credit card applications
- 6x increase in balance transfers
- More than an 18% ROI on ad spend