With an increase in financial awareness among consumers, experts ready to provide guidance, and technology tools to deliver real-time advice, why are Americans in more debt today than any other time in history? 1 According to a Yahoo Finance article, not having enough money to get by is the No. 1 financial fear. 2
A large part of the problem is the lack of financial literacy. Financial illiteracy is linked to money mismanagement and to debt. Debt, in turn, is associated with lower self-esteem, lower productivity, and greater stress. And stress leads to avoidance, which only exacerbates the problem.
Historically, the premise was that if it was easier for consumers to access their financial information, they would make better decisions. However, in general, simply having access to financial information isn’t enough for consumers to improve their financial standing. Increasingly, consumers expect their financial institutions to guide them and keep them from making financial mistakes.
When it comes down to it, everyone understands that they should save more and spend less, but many struggle to connect how their behaviors sabotage those broader goals. According to a report form Northwestern Mutual, “though the majority of Americans (53%) cited debt reduction as their top financial priority...additional new findings… suggest that [they] are digging further into—rather than out of—debt.” 1
Unsurprisingly, increased debt leads to anxiety and depression. And according to an American Psychological Association article, when people experience stress and anxiety, they generally deal with it by avoiding the thing that causes the anxiety. This toxic relationship with finances continues to spiral out of control and “unfortunately, if [people] avoid dealing with...finances, [they’ll] likely create more financial problems, and more anxiety, in the long term.” 1
Consumers intentional disengagement with their finances keeps them from becoming aware of the services offered by their financial institution that can actually help them get out of the trouble they are in. It also explains why, despite the availability of technology and expertise around finances, consumers' debt continues to grow.
According to J.D. Power, “78% of retail bank customers want guidance: Among the most common types of advice retail bank customers seek are quick tips to help improve their financial situation (41%); investment-related advice (39%); retirement-related advice (35%); advice to help keep track of spending and household budgets (33%); and saving for a large purchase (29%).” 3
Today, financial institutions are dedicating more of their financial and strategic resources on technology advancements in robotics & AI, machine learning, online and mobile banking capabilities and the improved use of data. All these efforts are focused on creating more customer-centricity. Technological capabilities also continue to increase and scale to enrich customer experiences. Additionally, the Bureau of Labor Statistics reports, Personal Financial Advisor careers are expected to grow at a rate of 15% a year through 2026. 4
Rather than continuing to expect that consumers will become financial experts, the opportunity for the financial services industry is to remove that burden and provide the guidance and expertise they expect. Customers deserve to have their financial institutions help them know when their own behaviors are getting in the way of their financial goals.
As the leading provider of financial data services, MX enables its clients and partners to easily collect, enhance, analyze, present and act on their financial data. Using MX’s platform and products, MX clients are able to understand their customers in real time like never before, allowing them to be truly customer-centric.