Financially healthy customers are good banking customers: they generally have control over their finances demonstrated by paying debt on time, keeping higher account balances and holding a larger variety of accounts at their financial institutions. With the concept of financial wellness creating buzz, many banks offer financial health products strategically to support, attract and retain good customers. But do they really have the desired effect?
It’s quite simple: In order for financial health products to have an impact, customers need to actually use them. Eighty-eight percent of banks and credit unions said in a 2023 Forrester Research survey commissioned by Personetics that less than half of their customers actively use the financial health tools they provide. Almost a third of respondents said 5% to 24% of their customers use the tools they offer; over half said 25% to 49% of their customers use the tools; and only 12% of banks and credit unions said that over half their customers use the tools they offer.
“Financial health tools and resources can be hugely beneficial for consumers — if they are surfaced at the right time and place,” says Heidi Johnson, senior director of behavioral economics at the Financial Health Network. “A consumer may not be aware of what their bank offers to help address their financial needs if these resources are siloed on their bank’s website. By embedding these tools within the customer experience, banks can better deliver on the value that these resources can offer.”
The most recent Financial Health Pulse report from FHN found that overall, the financial health of Americans has declined year-over-year between 2023 and 2024. Less people report spending less than their income (47% in 2024 versus 49% in 2023), less people report having a three months of expenses saved (56% versus 58%), and less people have a manageable amount of debt or no debt (70% versus 71%). On-time bill payment has also decreased since 2023.
“Supporting the financial health of your customers is good for business,” Johnson says. “Financial Health Network has found that when consumers view their primary financial institution as contributing to their financial health, they are three times more likely to say that they are ‘very satisfied’ with their financial institution, three times more likely to recommend their financial institution to friends and family, and five times more likely to report being interested in purchasing additional products and services from their financial institution. Satisfaction, loyalty, and cross-selling opportunities are core building blocks to drive a bottom line impact by supporting customers’ financial health.”
FHN advises that while larger forces that affect individual financial health remain in play, financial wellness products and benefits have a part to play in the financial health of Americans.
“A drop in interest rates may provide some relief for American households struggling with day-to-day finances, but industry actors still have a role to play in pushing towards improved financial health for all,” Kennan Cepa, principal investigator of the Pulse initiative and director of policy and research at the Financial Health Network writes in a statement. “By embracing financial health in product design and ensuring access to essential workplace benefits, industry can be critical drivers of financial health even when macroeconomic forces pose a challenge for consumers.”
Corporate Customers: Effective Partners in Delivering Financial Wellness
One of the places banks can deliver financial wellness is straight to the workplace through its corporate clients. Three out of four employers report that worker’s financial stress negatively impacts operations, according to a recent report conducted by PNC Bank looking at financial wellness in the workplace. Financially healthy bank customers are loyal; financially healthy employees are better workers. These concepts are at the heart of why PNC and others offer robust financial health education and packages to commercial clients, with one of the longest-running bank-at-work programs in the country going back three decades.
“We’re always looking for ways we can support our clients, and we continue to hear from them that they feel an increased responsibility to offer their employees competitive financial wellness benefits,” says Kaley Keeley Buchanan, senior vice president and head of PNC Organizational Financial Wellness. “Good employee benefits simply make good business sense.”
Buchanan explains how when working with employers on benefit packages, sometimes certain products — such as Health Savings Accounts, for instance — can be confusing to employees and don’t receive as much engagement or utilization. In these cases, a mix of digital education and in-person interaction is the key to driving engagement.
“Good employee benefits simply make good business sense.”
— Kaley Keeley Buchanan, PNC
“We really encourage our employers to listen to their employees and get a good understanding of where their employees are at not only from a financial wellness perspective, but also in terms of how they want to be communicated to,” Buchanan says. “We see some differences across generations, so just naturally at an individual level it’s good to really work to understand how your employees receive information and how they understand the information that’s being given to them. For benefits in particular, it’s really important that you’re communicating to your employees in a variety of ways.”
Buchanan has found that a mix of email communications, instructional webinars, and being on-site and doing in-field engagement is effective with their organizational clients. This maximizes the possibility of engagement, which as Forrester Research found is one of the key failures of financial wellness product offerings.
PNC created its organizational financial wellness business in direct response to a specific need from clients: for a business to stay competitive in a tight labor market, they must offer meaningful financial wellness programs that help attract, retain and motivate their talent. The bank has found that this program is an “attractive offering to both existing and prospective PNC corporate clients,” Buchanan says.
Engagement Depends on Good Product Design
The Financial Health Network takes the position that embedding financial health products in good product design can position banks as major drivers of change. Bank of America reports high engagement with its Life Plan product that it launched in 2020, a digital offering which allows customers to set and track near- and long-term goals based on their individual life priorities.
Within the first year, a reported 5 million users took advantage of the offering, making it Bank of America’s most rapidly adopted digital feature of all time. To date, Bank of America reports that 15.6 million clients have used Life Plan to set and track short- and long-term goals based on their life priorities.
“Financially healthy clients are more satisfied clients, and more satisfied clients are more loyal clients,” says Holly O’Neill, president of retail banking at Bank of America. “Clients who achieve financial security are able to meet their dream goals. They build deeper long-term relationships with us and grow their wealth and balances with us — in line with Bank of America’s commitment to responsible growth.”
Bank of America found their clients connecting with their finances digitally a reported record 23.4 billion times in 2023, an 11% increase year-over-year. Amidst this record engagement, the financial institution launched a massive update to its mobile app in 2024, unifying its banking, investing and retirement tools into one. The unified digital platform quickly won an award for “customer-centered innovation.” Also embedded in the bank’s digital offerings is an AI assistant, “Erica,” with whom a reported 19 million clients (approximately 27% of Bank of America’s client base) interact.
“Financially healthy clients are more satisfied clients, and more satisfied clients are more loyal clients.”
— Holly O’Neill, Bank of America
Finding the exact right way to deliver good products to customers can be a tightrope walk for banks. One of the most important considerations for products offered by banks, outside of the quality of the product itself, is how it’s delivered. And for a multi-generational customer base, this can get tricky. The recent U.S. Retail Banking Satisfaction Study from J.D. Power pinpointed that customers across institutions seek more value-rich content in their inboxes via email — they may not read every correspondence but find knowing it’s there reassuring. Generation Z values a mix of digital and in-person access to their banking partners, a shift away from Millennials who lean towards digital experiences. For what it’s worth, for its financial health support, Bank of America has also earned the seal of approval from J.D. Power for three years running for customer satisfaction.
“Our strategy to making sure we connect our clients with the best tools, services and product offerings to improve their financial health is two-pronged — by heavily investing in our digital capabilities and expanding our retail banking presence to bring solutions to more clients,” says O’Neill. “Our clients depend on their mobile banking apps for all of their daily banking tasks and even for personalized financial advice. We’ve also designed all our financial centers to be destinations for expert advice. Currently, we’re working to redesign their look and feel so that our clients can comfortably meet with our financial specialist in a professional setting.”
Financial Wellness: Good Business or Good PR?
Ally, an online-only bank, has recently been feeling the effects of a financially weakened customer base. As a response, the bank has pushed hard on new campaigns and brand partnerships to promote financial health in an attempt to turn the tide. However, reactive financial health offerings may only serve as window dressing rather than a real solution for a downturn in business.
Ally Financial stock, on a downward trend since 2022, fell 18% after chief financial officer Russell Hutchinson said at an investor conference on Sept. 10 that consumers are struggling with inflation, and that Ally Bank’s credit challenges have “intensified” during the current quarter. Throughout the year, delinquencies and net charge-offs rose amongst retail automotive customers (Ally is one of the largest car finance companies in the U.S.).
“Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture,” Hutchinson told investors at the conference.
In August this year, Ally launched a financial wellness program centered around mental wellness. Its new Money Roots program offers resources centered around “money psychology.”
“Up until now, banks have been focused on teaching the skills and providing the tools to help people manage their finances,” says Jackie Hartzell, head of external communications at Ally “But focusing on the ‘how’ — skills and tools — simply isn’t enough, which is why we are pioneering the industry to introduce emotions-based financial education to help people get to the root cause of money behaviors.”
Learn more about financial education initiatives:
- How SavvyMoney is Battling Attrition with Consumer-friendly Tools
- Using Data for Credit Management and Financial Wellness
- How Banks and Credit Unions Can Counter Bad Advice From ‘Finfluencers’
Money Roots is purported to offer interactive financial wellness programming that is “shame-free, grounded in empathy and designed to be reflective of a person’s goals and values.” Workshops through the program are meant to “create a safe space for vulnerability,” the marketing copy reads.
Ally has also this year entered into a partnership with the Calm app, a meditation and sleep tool, through which the bank is offering standard partnership offerings like free trials and premium subscriptions to Ally customers. This collection of new offerings is clearly designed to attract new customers — but it’s too soon to measure the program’s success as of yet.
Ally conducted a survey earlier this year which uncovered several findings that support its money psychology effort. The survey found that financial anxiety is the top driver of mental health challenges. Nearly 1 in 2 (46%) Americans say concerns about their finances impact their lives on a daily or weekly basis, with Gen Z (52%) and Millennials (50%) most affected. Respondents said that money woes affect their sleep, mental health, and personal relationships. Sixty percent of consumers said they are “less than confident” in their financial condition and find savings virtually impossible to maintain, with more than half (51%) unable to cover an emergency expense of $500 without going into debt.
What You Need to Know About Consumers:
“Eighty percent of consumers say that they want their financial institution to help improve their financial health,” says Financial Health Network’s Johnson. “Only 14% of consumers say that their bank is doing this, however, which opens up a competitive advantage for financial institutions that can differentiate themselves with their financial health offerings.”
“Technology is helping us make this differentiated, game-changing approach more accessible,” says Hartzell. “It’s also removing barriers — real or perceived — that may prevent someone from participating or going on this journey with us.”
Ultimately, Money Roots’ main benefit may be that it provides an accessible, non-threatening pathway into financial health for customers who don’t know where to start. Whether the program will move the needle on Ally’s customers’ recent struggles, only time will tell.
Ranica Arrowsmith is a freelance writer based in New Jersey, focusing primarily on the technology, finance and accounting industries. She has written for Accounting Today, MarketWatch Picks and other publications in the medical technology space.