Spoiler alert: financial health is not a box to tick. It’s your new business strategy. 

“Promoting customers’ financial well-being is a great opportunity for financial services firms to respond to the ever-increasing number of values-based consumers, boost customer loyalty, and drive growth,” Forrester’s Aurélie L’Hostis writes in the research company’s recent report, The Financial Well-Being Opportunity. Her words ring truer by the day as the world embraces a new normal in the wake of the coronavirus crisis. One that forces businesses, financial or otherwise, to keep a dialogue open with their customers and stay in sync with their needs – from at least six feet away. 

No country for old thinking

For financial industry actors, this means converting customers to digital channels and products and safeguarding their financial health in a post-coronavirus economy. 

If there’s one point that the pandemic crisis drives home, in particular, it’s this: taking care of customers’ financial fitness is not about rolling out flashy apps or showing rainbow-coloured charts. Or not exclusively that. The senior analyst explains, “Banks think they’ve ticked the financial well-being box by offering digital money management tools. But these narrow, one-size-fits-all tools have disappointed users and firms that offer them. Financial services firms need a more holistic, personal, and proactive approach to customers’ well-being.”

Banks think they’ve ticked the financial well-being box by offering digital money management tools. But these narrow, one-size-fits-all tools have disappointed users and firms that offer them. Financial services firms need a more holistic, personal, and proactive approach to customers’ well-being.
Aurélie L’Hostis, Senior Analyst at Forrester

Customer intelligence, of course, is key to smarter financial decisions. To recap, here’s how transactional data and transaction categorisation can help banks (and customers) better understand and keep track of spending behaviours. But to build a full-fledged financial well-being programme, it’s even more important to monitor how these individual behaviours change and to personalise customer interactions accordingly. “Consumers have unique financial needs, which vary depending on life circumstances and over time,” L’Hostis points out. “To position themselves as trusted advisors, gain customers’ loyalty, and drive growth, financial services firms need to develop products and services that genuinely meet customers’ needs and deliver value.”

Rising to the corona challenge

Using so-called trigger algorithms, for example, banks can spot if a customers’ income has been negatively affected by the economic fallout and build use cases for responding to such scenarios. People with no salary coming into their current accounts can be flagged to receive offers for emergency loans and updates on available relief options. Peer comparisons and cash flow patterns can also reveal which customers are financially stable for the time being but have a good chance of being hit with financial trouble in the future. Then banks can remind them to transfer money from one account to another to cover upcoming bills, alert them of scheduled transactions that might send them into the red or help them stick to the 50/30/20 Budgeting Rule. Finally, those who have no problem keeping the lights on and, confined within four walls, end up saving more than before, might appreciate some advice on where to invest their newfound savings.  

Staying relevant post-corona, L’Hostis reckons, will depend on banks’ willingness to rethink how they look at customers, revenue sources, and most importantly, their own raison d’être. “The 2008 financial crisis caused a massive reputational damage to the financial services industry. But it hasn’t spurred firms to adopt more customer-focused or sustainable business models. Over the last decade, financial services firms focused predominantly on shoring up their profits. But now financial services firms are under high pressure to rethink their broader purpose and responsibilities and adopt more socially responsible and sustainable business models,” the analyst says. She continues: “If financial services providers fail to stay relevant to customers’ everyday lives, they will become backend suppliers only — the plumbing behind the scenes in customers’ financial ecosystems.” 

Banking in the time of COVID-19: how personalisation can help banks stay connected to their customers

Banking in the time of COVID-19: how personalisation can help banks stay connected to their customers

Learn how personalised digital experiences can help financial service providers tap new sources of growth even in these uncertain times.

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