The aim to empower consumers and improve financial health is taking center stage in the financial industry. But why now?
Factor 1: The Economic Climate
Many Americans have spent the past ten years climbing out of the Great Recession. Additionally, we can recognize the wealth gap widening – some have improved their financial status while others are still struggling. The 2016 National Financial Well-Being reports from the CFPB show 40% of adults struggle to make ends meet and many aspire to maintain or improve their financial health. As a result, more and more financial consumers seek to improve their financial health by accessing financial services that deliver enhanced, personalized experiences – and ultimately, progress.
Factor 2: Transparency with Financial Institutions
For financial institutions, the ‘go in it alone’ approach of the past is no longer viable. Recent strains on the trust of financial institutions have increased due to numerous ethical, service or process missteps. The fraudulent scheme of Wells Fargo uncovered by federal regulators in 2016 may come to mind, whereas its employees secretly created millions of unauthorized bank and credit card accounts – without their customers knowing it – since 2011. Due to the recent uncovering of unethical practices, transparency between financial consumers and their institutions is becoming a necessity for big banks to retain customers. Providing personalized, financial health options is an effective way to maintain transparency and build meaningful relationships between big banks and customers.
Factor 3: New Technology
Forward-thinking financial institutions are leveraging technologies such as increased automation, artificial intelligence (AI) and innovative service options to meet their customer demands for financial wellness.
Improvements in technology empower and allow consumers to quickly access important financial transactions from their mobile devices. The implications of these decisions may help or impede financial progress which is why many forward-thinking financial institutions are implementing or updating systems for action-based financial wellness.
Moreover, the combination of readily available technologies is now being used to form assessments that measure a holistic financial health score. Financial protection agencies (such as Consumer Financial Protection Bureau) alongside forward-thinking financial institutions, leverage this ability to monitor interventions for financial health. With the capacity to measure financial wellness, it is quantifiably proven how access to financial services – along with education – leads to progress.
Through a blended approach of online and personalized coaching services, the financial industry can prove it is genuinely aimed at delivering financial vitality.
A Hopeful Future for the Financial Industry
Concluding that the quality of financial care has improved within the last decade may be an overstatement. However, with the demand for personalized, financial services increasing, and technologies to enable the delivery of these services, the future is promising for the financial consumer.