Can your FI recognize account holder financial stress, before it’s too late?

73% of Americans rank their finances as the number one stress in their life.
– CNBC

All financial institutions have an obligation to ensure account holders are in the best financial state they can be in.

FIs are uniquely positioned to provide complimentary practical education and services, as well as necessary financial products that support savings, investing, and provide easier access to credit. This starts with insights into recurring financial spend patterns and credit transactions, and assessing your account holders’ financial stressors.

At a time when competition can be fierce, targeted programs can assist consumers when relevant advice and services are needed, building brand loyalty. Now is the time to make financial wellness a fundamental principle at your financial institution.

Customers today expect their primary financial institutions to anticipate and solve for all of their financial needs. Yet even with access to colossal amounts of data, it’s hard to make sense of all the information available to truly help customers reach their full financial potential.

Financial institutions must expose hidden information about their account holders based on their transactions. Analyzing the funds coming in and out of your institution can help build audiences based on lifestyle, needs and preferences, oftentimes revealing signs of financial stress. Move away from the old “fire hose” method of marketing. Instead, market relevantly to those audiences whose behavior tells you that they are in need of support, and offer them the right product or service. Done intelligently, you’ll be there before consumers are willing to admit they need your help.

How can an FI identify those in financial distress?

The following factors can help to determine who inside of your ecosystem may be experiencing a shift in their financial status:

• Falling behind on credit card payments.
• Now making smaller credit card payments than usual.
• Reduced payroll deposits.
• Stopped receiving payroll deposits.
• Started receiving unemployment benefits.
• Payroll increase.

Every person’s life story and financial journey is different, but with the right fintech partner and with the assistance of AI modeling, banks and credit unions can now predict future behaviors based on current transactions, past transactions, and product utilization.

How your FI could be a stress reliever to your account holders…

Armed with information about your account holders’ spending and earning behavior, and with the right fintech partner, your FI can tailor outreach programs to assist and empower people with their unique financial situation.

Here are some suggestions for financial wellness education and offer opportunities, all of which should be targeted to specific segments of your overall audience, to maximize success and minimize overcommunication:

• Author a series of emails aimed at educating your account holders about their options when it comes to their finances.
• Record or host live Q&A events with your in-house mortgage, loan and investment specialists.
• Communicate through teller, and in-branch signage that financial counselling is available by appointment, for free.
• Offering products, such as balance transfers, to those making payments to multiple held away credit card providers.
• Personal loans or increased balance credit card offers to those who recently stopped receiving payroll deposits or who began receiving unemployment payments.
• Offering to delay a personal loan, HELOC or mortgage payment to the end of the loan, giving your customer more money in their pocket now when they need it.
• For those who have a recent increase in their payroll deposits, offering timely product offers and events around the topic of investments.

If you don’t help them…someone else will.

Financial Wellness as a topic of conversation is pervasive, as are the institutions offering solutions to your customers. Even startups, like HoneyBee, which TechCrunch recently reported5 is capitalizing on the market’s desire for more financial education, as well as access to what they’re calling “rainy day funds”.

“During the pandemic, when the need for its offering was even greater, HoneyBee signed over 60 mid-markets companies as customers and is launching with Fortune 500 companies later this year. The startup’s user growth grew by 225% during the pandemic and the company says it delivered over $2 million in rainy day funds. Meanwhile, its on-demand financial therapy usage increased by 172% over the prior year.” TechCrunch report5.

While HoneyBee may be currently targeting companies in order to offer their services as part of the benefits package, not every Financial Wellness provider is so niche. Your direct competitors are seeing the benefits of offering financial counseling services, and are even targeting ad campaigns to them directly.

Financial institutions have an obligation to ensure account holders are in the best financial state they can be in.2 Insights into recurring financial spend patterns and credit transactions along with recognizing account holders’ financial stressors is the first step to providing highly personalized financial wellness support.

FIs are uniquely positioned to provide complimentary practical education and services, as well as necessary financial products that support savings, investing, and provide easier access to credit.2

At a time when competition can be fierce, targeted programs can assist consumers when relevant advice and services are needed. Now is the time to make financial wellness a fundamental principle for the future of banking providers.2

Times are changing. Account holders expect their banks and credit unions to already know all of their financial needs. Your obligation as an FI is to truly help your customers reach their full financial potential. Doing so in today’s world means wisely using data.