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How Users of Data-driven Money Management Increase Profitability

Read the whole case study here.

Users of Data-driven Money Management Increase Savings By 20% Over Four Months

Financial institutions that offer data-driven money management are not only enabling visibility around one’s finances through aggregation, budgeting and alerts, but also building financially strong account holders who increase their savings rate.

Mountain America Credit Union recently compared the savings behavior of account holders using MX’s solution, branded as My Money Manager (MMM), with that of non-users. Mountain America wanted to know what would happen to a savings account when someone became a user of MMM and contrast that with a non-user over a four month period (August-November 2015). Users of MMM increased their savings rate by 18 percent in that time frame while non-users demonstrated a 2 percent decrease in savings — a difference of 20 percent. The analysis was conducted using a log-linear model with fixed effects, stripping away any reverse causation (i.e. people that are more likely to save are more likely to use MMM) and controlling for age of the user, amount of money in their checking account and amount of money borrowed in Mountain America loans. 

Profitability of digital money management users

These results sounded almost too good to be true. What would happen if we looked at another four month time span, particularly one where account holders had holiday shopping bills to contend with? For December 2015-March 2016, Mountain America found that users of MMM increased their savings rate by 20.08%. This only served as further evidence that a statistically significant behavioral change was underway.

As we inspire a new generation of financially savvy super savers, there is a benefit for both financial institutions and their account holders. The financial institution benefits by attracting higher deposits that ease the balancing of the books, and the account holder more easily qualifies for quality loans, a win-win for both parties. Savings activity within a financial institution also carries an advantage over emerging third party apps. A savings app like Digit doesn’t pay customers interest on their money, extracting what would’ve been earned as a fee. In contrast, customers of institutions like Mountain America get to keep that interest. 

Satisfy Your Most Important Account Holders

Users of MMM do carry some unique attributes, as they’re younger, more affluent, have higher credit scores (by a margin of 53 points relative to the overall member base, meaning MMM users are prime candidates for the cross-selling of loan products), hold more accounts with Mountain America and generate more profitability. This is not a suggestion of causation — where a user would suddenly start accumulating more products and generate more profitability as they begin using MMM — but we do know that we are serving some of our most profitable customers when we roll out data-driven money management. 

1.5 greater tendency to hold auto loans and 1.4x greater tendency to hold mortgages

Through data-driven money management Mountain America is satisfying users who hold the most products and are the most profitable for the institution. Mountain America is also investing in the future as millennials are the most likely of any generation to remain active users of MMM. As these customers mature in their financial lives Mountain America will be the hub of their financial activity. 

If you’d like to learn how you can help your account holders increase their savings, aggregate their accounts and become more profitable for your institution, talk to an MX representative or visit MX.com. Contact us at (801) 669-5500 or sales@mx.com

Topics: Case Studies