Customer financial health should be a top priority

In an economy stressed by high inflation and growing recession worries, many Americans are struggling with their finances.

Rochelle Gorey from SpringFour discusses how banks and credit unions can be more innovative in tending to their customer’s overall financial health.

A few takeaways from the conversation:

    • Figuring out how to help people better manage their debts and payments, along with saving for the future, should be a leading priority.
    • Developing customer trust goes beyond products – it also means offering educational content and recommendations for available resources.
    • In a competitive market like banking, tending to customers’ financial health in an innovative way can be a way for institutions stand out.

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Rochelle Gorey, CEO at SpringFour, welcome to the BAI Banking Strategies podcast.

Hi, Terry. Great to be here today.

Rochelle, SpringFour is one of our neighbors here in Chicago. Please tell us a little bit more, if you could, about the company, including what kinds of services you provide and the types of institutions that you work with.

Of course. SpringFour is a social impact fintech company right here in Chicago, and we work with financial institutions to offer vetted and curated financial health resources. We do that in over 30 different what we call service or spending categories. So help connecting customers to financial counseling, food savings, help reducing medical care costs, employment, resources, and so much more. What we’re finding is when we help banks connect their customers to financial health resources, they see better repayment rates, increased borrower engagement, it empowers their employees, and then we’re also able to help banks meet their ESG goals.

Fintechs are innovators by nature. Their very reason for existence is to redefine how people spend and store and invest their money. Generally speaking, how do you think banking institutions are doing in leveraging or learning from fintechs and what could they be doing better?

I see a great amount of innovation and partnership occurring between banks and fintech organizations. I think that banks have realized that by partnering with fintechs, they can often bring products and solutions to the market quicker and faster. I think that’s wonderful. Then we saw during COVID that banks were deploying fintech solutions much quicker than they had in the past. I think banks and fintechs came together to get products and services out that were needed by their customers during a very interesting time.

Let me reverse the question. Based on your own experiences and your observations, your conversations with others in the industry, what do you think fintechs could be doing or should be doing that might help them get even more into sync with banks?

Well, of course, there’s always room for improvement. But I think that banks and fintechs are coming together. I think that one thing that can be helpful is the ability for fintechs and their bank partners to showcase the successes and the work that they’re doing together. So fintechs pushing their bank partners to demonstrate their impact through case studies, through testimonials. I think that fintechs participating in any bank accelerator programs offers an excellent opportunity to show market fit, demonstrate success, and then bring those lessons and learnings and innovations to the wider industry. I think that fintechs should look at banks as an opportunity to demonstrate product market fit and that banks can utilize fintechs to really reach perhaps some customers that they’re not reaching now. I think there’s still a lot of innovation to occur.

In my last podcast, I spoke with a banking consultant about innovation, and I want to ask you one of the questions that I asked him. With banking going increasingly digital, commonly heard advice is that banks need to act more like fintechs. Do you think that should be the goal for banks?

Well, I think there’s room for both, right? A fintech can learn from a bank, and a bank can learn from a fintech, certainly. I think that both need to look for partnership opportunities to expand the reach and the impact. But I think that banks can benefit from a FinTech’s ability to act quickly and innovate. Banks can help a fintech scale with their market size and scalability and able their ability to reach customers.

You bring up acting fast. During the pandemic’s early months when lockdowns were occurring and everything seemed to be in turmoil, banks demonstrated a burst of innovation in how they operated and how they served their customers. They moved fast and they figured out a lot of things on the fly, which is very different from their business as usual. But once the emergency was over, it seems like those older, slower, more methodical ways have taken over again. In your dealing with banks, do you notice any vestiges, any lasting impacts from that early pandemic urgency?

I think we’re seeing the urgency increase as we see what’s going on with the economy and how consumers are dealing with high costs throughout almost every household expense. I think bank executives are understanding that it does make sense to provide assistance and products and solutions to people when they’re facing economic challenges. I see acceleration occurring and I think it’s going to continue as we move into 2023.

Given that there’s by and large been a return to those old days, do you think this is a missed opportunity for banking institutions innovation-wise? If you do, how can it be fixed?

Yeah, I mean, I don’t see it so much as a missed opportunity, but I do think there could be at some levels a greater urgency. I think there… Now is the time for banks to implement solutions that can help customers weather this financially challenging time. There are products and solutions out there that do that. I’d like to see more of an uptake of those solutions. The pandemic did teach us and show us that banks are able to do so. I think that if there is a will, there is a way, and we can get it done.

Rochelle, it’s hard to believe that we’re already in early November, and before we know it, the calendar will say 2023. As we approach the new year, if you were in charge of directing efforts toward innovation for the banking industry as a whole, what key areas would you be pushing for?

Well, certainly we need to help Americans meet their financial needs. Every American is facing a financial hardship right now. I think that if we can figure out how to help Americans pay down or pay off their debt, I mean, certainly that’s about helping people stay current on their payments. Retirement planning is certainly a need. And then some Americans are really seeing a need for investing or portfolio management. I think fintechs involved in these areas can utilize this kind of information, this data of what Americans, what consumers are facing to show the importance of their product and find banking partners to help bring those to market.

Yeah. As a nation, we’re feeling the rising economic stress from inflation that’s continuing to run at four-decade highs, and worries about what could be a painful recession are getting even more prominent in the news. But that said, what you were just talking about before, which kind of falls under the broad heading of financial health, isn’t that something that’s kind of an all-season thing?

Well, yes, I think it certainly is an all-season thing. Look, every day we’re faced with choices and how we spend our money. Financial health is front and center to everything we do as a consumer. I think that more and more banks are recognizing that and figuring out ways to address the needs of their consumers and help them figure out their most immediate needs. How do I help my customer pay their bills today, this month, and going forward?

I would think that financial health should be at the core of the customer experience. It’s true that we’re hearing more about banks and credit unions planning to transform their branch lobbies into advice centers. How much of an innovation would this be to you, and in what ways do you think banking would look different if everything revolved around financial health?

I think it would be amazing. I think that certainly needs to happen if we meet customers where they are in that moment. There can be so much good that comes from that. I think that banks’ customers would be less likely to fault on their payments. They would be coming in, seeing their banker, trusting to go to their banker with their challenges that they’re seeing, and know that the bank could be a solution for them.

For banks to be able to connect with customers at such a fundamental level, there needs to be a high degree of trust. How do banks develop that trust? Is this an area where some innovation might prove beneficial?

Yes, absolutely. I think banks can develop trust by meeting their customer needs. I think that for a large majority of Americans, they do already trust their bank. We did a study a year or so ago, and the majority of consumers said they trusted their bank—I think it was 83% said they trusted their bank—and they wanted to receive assistance, and help and information from their bank about how to meet their household expenses. Customers, they already trust banks to protect their savings. If we’re able to turn to banks for recommendations about financial resources and products or get help from banks educating people about resources, this is going to further build engagement and retention of bank customers. It’s a good thing that banks ought to be doing.

In terms of what’s at stake, traditional banks are feeling competitive pressures from a number of directions, and certainly fintechs and nonbanks. Other nonbanks are a big part of that. In this environment, banks are looking for edge wherever they can find it. Is tending to customers’ financial health, is that something that if it was done in a more innovative way, could be a competitive differentiator? What might that look like?

Absolutely. I mean, I want a bank where I know that my needs are being thought of and being tended to. I think that banks can be very proactive about connecting the people in their communities to financial resources, and they can help a customer understand how to get connected to local resources that do exist through nonprofit and government resources, help connecting them when they can’t pay their utility bills to a local energy efficiency program. Fintechs can help banks understand more about their communities and tailor their services to do so. I think when we do that, we all win. A bank is going to be more successful. They’re going to retain their customers, and their customers are going to see better financial health, and they can perhaps utilize additional bank products or expand their breadth of services within that bank because they’re more financially healthy.

Rochelle Gorey from SpringFour, many thanks again for joining us on the BAI Banking Strategies podcast.

Thanks, Terry. It was fun.