Financial wellness has had an uneven history in banking. The concept too often has been treated more as a feel-good exercise than a true commitment. And even those banks and credit unions that recognize its importance have struggled to engage consumers with budgeting and financial health tools.
However, more financial institutions now recognize that ensuring consumers’ financial health is not only a good way to do business, but it’s also a way to increase profitability and revenues. They also see it as a competitive differentiator and a buffer to fintech competition.
In March 2022, Bank of America became the first bank in the country to become certified by J.D. Power in its Financial Health Support Certification Program. The bank’s approach has been to address financial wellness by building an omnichannel platform that enables consumers to set goals, track their progress and get quick and easy answers to financial questions.
Holly O’Neill, President of Retail Banking at Bank of America, spoke with Jim Marous, Co-Publisher of The Financial Brand and CEO of the Digital Banking Report during a Banking Transformed podcast. She covered how the bank’s wellness framework includes digital products that are simple to use and personalized, financial education and access to human support. While this strategy benefits consumers, it also positions Bank of America as a partner for life, creating an ongoing revenue stream.
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Five Pillars of Financial Wellness
While many banks talk about supporting financial wellness, they don’t always walk the walk. What sets apart Bank of America’s program is a framework that supports consumers’ financial health based on five key pillars, according to O’Neill. These are:
- Simplify your finances
- Manage your money
- Leverage experts
- Build knowledge
- Get help when needed.
Using these pillars as a foundation, BofA has created a customer experience that puts financial health front and center, says O’Neill. It is built on an integrated combination of services that help people budget, save, spend and borrow.
The services include programs like SafeBalance, Balance Assist, Balance Connect, and Keep the Change. There’s also Better Money Habits, a selection of free tools and resources to help people improve their financial picture.
“We’ve been at it for over a decade,” says O’Neill, “listening to clients — listening and working to put the right framework into place.”
A key element of that framework, launched in October 2020, is Bank of America’s Life Plan app, which resides within the bank’s mobile banking app. Life Plan is a digital tool with which customers can set and track near- and long-term goals based on their life priorities, and act on steps toward achieving them. O’Neill says five million customers were using Life Plan as of early 2022.
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Making Sure Employees Can Support Digital Tools
To really succeed at driving financial wellness for their customers, banks and credit unions have to offer more than just budgeting tools and financial education content. The key is to make financial wellness an ingrained habit not just for customers but for bank employees by providing the latter with tools to continue the customer’s planning work, or deal with something as simple as how to set up an alert. Consumers who use BofA’s Life Plan app can talk to relationship managers about it in the bank’s 4,000+ branches. All the RMs have been trained for that and have access to the same software.
Erica, Life Plan and thousands of support specialists give Bank of America a potent high-tech, high-touch retail banking strategy.
“We really try to integrate the experience with the tools that we have and the specialties that we have,” says O’Neill. Reps know exactly what somebody’s been doing in mobile so they can anticipate what the person might need. “If somebody calls and says they’ve had a suspicious transaction,” O’Neill continues, “we [already] know that … and can ask them the questions immediately to make sure that it was in fact their transaction.”
Another key part of Bank of America’s financial wellness strategy is its hugely popular virtual assistant, Erica. Customers can now ask Erica to send weekly updates on monthly spending, explore financial management strategies and access their investments in BofA’s Merrill subsidiary. When further help is needed, Erica can refer the customer to a specialist.
“We’re really driving Erica to be very predictive and giving clients the information that we think is relevant to them,” says O’Neill. “If we think they’re vulnerable, we’ll tee up Better Money Habits, or a section of Better Money Habits that we think would be relevant for them.”
When applied in the right manner and armed with the right information, Erica and Life Plan together become what Jim Marous calls a “GPS of financial services,” telling consumers where to go, how to avoid pitfalls, and how to best get to their destinations.
“If a client uses Life Plan and sets their goals, all of that will be integrated and come together,” says O’Neill. It also means the bank will have that much more information about a customer.
Financial Wellness As a Fintech Antidote
Armed with data and these applications, Bank of America is able to engage in far more personal interactions, often in real-time. Customers can now access hundreds of alerts like “Your balance is low” and “Was this your payment?” — all of which can help those living paycheck to paycheck.
This also positions banks to better compete and potentially halt the migration of bank customers to fintechs. “We have a healthy view of what our clients are doing with these smaller, niche competitors,” O’Neill states. “They do very specific things. And that’s where I think Bank of America has an edge.”
The bank, she continues, can wrap the whole consumer experience with financial wellness in all categories, whether it’s their daily operating account, lending, setting goals or setting plans. Integrating those capabilities with tens of thousands of customer service agents also enables the bank to support a human touch.
Financial wellness tools should be less about looking in the rear-view mirror and more about shaping behaviors and outcomes.
As a result, O’Neill says that Bank of America has not lost a material number of customers to fintechs. “We haven’t seen a big exodus because I think that wrapper of financial wellness around our entire customer is incredibly important,” O’Neill states. “It’s a long-term view when you’re seeing your goals, setting your path and you partner with a financial institution that will see you through every life stage.”
All those relationship managers make a difference as well. “If you do have a question, if your situation is more complex, or if something’s not working the way you think it should,” O’Neill states, “that specialist support all along the journey is a differentiator from fintechs.”