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Pulse-Nudge (1)(Note: This article written by MX Research will be published in Credit Union Times on April 24, 2019.)

Banking as we know it is about to enter a third era of competition. One defined by customer outcomes and driven by artificial intelligence (AI) insights.

In the first era, location and convenience equaled dominance. Simply being close to where customers lived and worked was of primary importance.

By the 1970s, consumers grew more affluent and priorities changed. Location was still significant, but with a wider range of financial options and responsibilities came consumer focus on competitive rates and fees—the battleground of the second era of banking competition. This period gave rise to products like free checking and the need to compete with low rates to win significant business, like home mortgages.

The digital age has flattened competition both for convenience and for rates. At the same time, consumers are more aware of their financial options than ever, and more in need of personalized guidance to help them improve their situation. At the intersection of these trends is a new era defined by the quest for personal financial health.

“That’s the next basis of competition in banking: to demonstrate the impact your services have on a customer’s overall financial health,” says Ron Shevlin of Cornerstone Advisors.

Delivering health by the numbers

Today’s consumer is keenly aware of metrics and statistics. We live in an age where prices, information, and measurements of all kinds are available on demand, at a glance. But metrics to measure financial health are few and far between. As organizations like the Center for Financial Services Innovation (CFSI) work to help define financial health metrics and educate the public, banks and credit unions are uniquely well positioned to differentiate their services around financial health.

Discussing financial health with customers opens new moments of opportunity to intervene, advise, and offer. And developing data and AI-driven systems that can predict outcomes and seek appropriate individual solutions will allow banks to present their services as being uniquely focused on the bottom line—of each and every customer. Instead of presenting rates and fees in isolation, credit unions and banks can open conversations about the measurable impact of financial moves and services, tied to the key financial health metrics that matter most to the individual. 

Unlike credit scores, which are most impactful to those with lower scores, emerging financial health metrics will offer new ways to have creative conversations with consumers in the mid-range and high end of the market. In personal health, some individuals are interested in monitoring blood pressure to improve their health, while a finely tuned athlete is more interested in metrics that emphasize performance. Banks that establish a foothold in financial health will be able to guide conversations about performance and optimization with these upper-tier clients and score key early wins in this new era.

The role of data and AI in the financial health era

Banks and credit unions won’t be able to define, measure, or advise without deep insights and capable partners in data and AI. “Banks are at serious risk if they are not investing in the data capabilities and assets that are going to drive AI technologies in the future,” Shevlin says.

Beyond financial health strategy and messaging, financial institutions will need technology to help their clients gain financial strength. And that’s where MX MoneyMap with Pulse comes in.

MoneyMap with Pulse gives banks and credit unions a powerful combination—clean, enhanced and categorized data; and AI-powered, personalized, real-time insights and advice. Customers then make better financial decisions, increase their engagment and build their overall financial strength. It ushers in a whole new age of machine learning-driven financial guidance.

To learn more about MoneyMap with Pulse, visit www.mx.com/pulse.

“Forget trying to become the Amazon of banking,” Shevlin says. “Become the Fitbit of banking: show that you have your finger on the pulse of consumer financial health.”