Mission Failure: The Banking Industry’s Approach to Financial Health

Banks and credit unions proclaim their mission is to help consumers achieve financial success. Few live up to that aspiration, however. A former bank executive details six roadblocks to delivering successful financial health programs and suggests measures to overcome them.

Here are two phrases commonly found in the mission or value statements of banks and credit unions: “The path to financial wellness starts here.” Or, “Helping members achieve financial success.” The sincerity is real, but few institutions actually deliver on those promises.

Too often they enhance their digital channel with a few financial calculators, write some blogs on their website and declare, “Mission accomplished.”

My insights come from first-hand experience. I launched a team of financial health coaches at one of the Big Three U.S. banks. By many measures, the effort was a success. The team coached 75,000+ consumers, had sky-high customer satisfaction scores, and was featured in the company’s annual report plus a brand advertising campaign.

Despite these successes, the team was disbanded and I moved on. In my current role, I not only work closely with GreenPath Financial Wellness, a leader in financial counseling, but also discuss financial health programs with hundreds of executives in channel, customer experience, and financial wellness leadership roles.

6 Reasons Financial Institutions Fail to Move the Needle on Financial Health

1. It requires personalized, ongoing, judgment-free advice

Reaching one’s financial goal is just like any self-improvement journey, meaning it is a long road with thousands of potential paths. Navigating the journey requires a series of personalized, bite-sized action plans. The advice must be delivered in discrete chunks, so as not to overwhelm, and served up as an ongoing diet because financial improvement requires many actions.

The advice must also motivate. Through their experience guiding millions of consumers, my colleagues at GreenPath have learned that empathetic, unbiased and judgment-free advice is key.

More than Tools:

It’s not enough to offer advice to people to improve their financial health. You must also inspire them to take action.

2. Using bankers to deliver personalized advice is expensive and risky

Having a banker deliver hours of personalized guidance at several hundred dollars of cost for a mass market consumer is not cost-effective. Moreover, these bankers are usually entry-level positions with high turnover, increasing the risk that they give guidance that is “off script,” causing compliance and legal issues.

I have the scars from battling with compliance and finance teams while leading the megabank financial health banker team to remind me of the potency of this issue.


3. Success necessitates behavior change

The most impactful actions to improve financial health often involve behavior changes, such as consistently paying bills on time or creating and sticking to a budget. Changing an individual’s behavior requires ongoing engagement and support. As mentioned in point two, most bankers do not have the required skill or time. While technology has the potential to drive the necessary consumer engagement, banks and credit unions have yet to embrace the gamification and behavioral science best practices to nurture the required behavior changes.

4. Progress is hard to measure

Improving financial health means something different to every person. Some need to increase savings or improve their FICO score, while others need to pay down debt or invest more toward a long-term goal. Therefore, tracking the progress of consumer financial health is a herculean task. Without a practical approach to gauge progress, financial health programs lose out in the resource prioritization game to more traditional and easier-to-measure sales or customer experience initiatives, which leads to half-measures that don’t really work.

5. People must be engaged at their moment of need

Personal finance can be a scary topic and difficult to understand, making it the perfect task on which to procrastinate. Certain triggers (e.g., a declined credit card transaction) and life events, however, can move people to seek help. A financial health program will touch enough consumers to move the overall needle only if the institution commits to targeted and sustained marketing to engage consumers when they are most receptive to advice and motivated to act.

6. No senior executive owns financial health

Overcoming the above hurdles requires more than money. It takes cross-functional coordination from compliance, legal, product, channel, marketing, finance and IT. Even in community institutions with fewer “silos” this can be a challenge. Few financial institutions have created a senior-level executive with a large budget and mandate to drive a financial health program. The relegation of financial wellness to mid-level executives is a key reason why most banks and credit unions limit their efforts to calculators, articles or workshops. That is the limit of what a mid-level executive can deliver.

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How AI Can Alter the Scenario

At this point, you are probably thinking that financial institutions will never successfully improve people’s financial health. The development of digital engagement solutions powered by artificial intelligence, available to most institutions, is changing the landscape. These tools provide the means to overcome the first five of the six hurdles noted above.

The solutions can deliver advice that is personalized (driven by conversational AI), ongoing, and always compliant (bots do not go off script!). Many of them incorporate gamification and A/B tested behavioral change tactics inspired by behavioral science. In addition, some of them enable targeted marketing at key moments of need and provide full reporting, including consumer progress.

Will consumers use a fully automated digital solution to improve their financial situation? An Aite Group survey of 2,413 consumers found that 58% are interested in using a virtual financial coach to help them meet financial goals. Commonwealth, an organization working to strengthen the security of financially vulnerable consumers, found that people who experience financial hardship are three-times more likely to use a financial app than people that did not encounter financial difficulties.

Potential Exists:

Over half of consumers in one study say they would like to use a virtual financial coach to get to where they want to go.

Finally, nearly seven in ten consumers who use GreenPath’s Virtual Coach to help them review their credit report have found an error in the report and used the coach to dispute it.

But what about the sixth challenge, securing senior executive ownership of financial health?

No technology can solve that one. Ironically enough, however, my previous employer decided to stand up a senior financial health executive and team with a large budget after shutting down our team of financial coaches. Which shows clearly that there is value in a financial health program if it is properly structured and funded and makes use of modern tools.

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