Debbie Bianucci
Debbie Bianucci Apr 28, 2015

Moving the needle for consumer financial health

If an industry is only as healthy as its customers, then the banking industry has some work to do. A number of studies have revealed very compelling findings about the state of financial wellness in this country. There is no question that we have our work cut out for us if almost a third of Americans have no retirement savings and about half would have difficulty coming up with $2,000 to cover an unexpected expense.

The state of financial health is not for lack of effort on the part of many financial services companies and other organizations. It’s just that these efforts are not yet having the impact that is needed. Maybe it’s time for some fresh thinking on new ways to move the needle.

We recently assembled a panel of financial services leaders who are passionate advocates for a different and collaborative approach to building consumer financial wellness. They included Rilla Delorier, executive vice president of SunTrust Banks; Jennifer Tescher, president and CEO of the Center for Financial Services Innovation; Susan Keating, president and CEO of the National Foundation for Credit Counseling; Dixie Noonan, director of partnerships and initiatives for The Shriver Report; and Laura Winters, associate vice president of the Council for Adult & Experiential Learning.

With such a group of people driven to think differently about how to address these important issues, we covered a lot of ground in terms of exploring the financial needs of various segments of customers. As we worked through the issues, consensus crystallized around three key points.

The first is that financial wellness must be an important priority for financial services companies. The needs of our customers are simply too great for this to not be a clear priority. With some estimates indicating that nearly 70% of Americans live paycheck to paycheck, combined with the ineffective retirement planning already noted, too many customers have little or no financial cushion.

Secondly, there is some interesting and progressive thinking by banks that have stepped up to exert a positive impact. For example, Cincinnati, Ohio-based Fifth Third Bank was recognized as the “Innovation in Societal and Community Impact Winner” in the BAI-Infosys Finacle 2014 Global Banking Innovation Awards. The bank developed a creative program designed to provide customers who are behind on their mortgage payments with advice and job search services that would help them find employment.

Minneapolis-based U.S. Bank, meanwhile, offers tools and resources to build financial skills, Wells Fargo of San Francisco helps customers with financial advice and credit counseling, while KeyBank of Cleveland, Ohio, provides financial health scores that enable customers to monitor and improve their financial health. And, interestingly, the not-for-profit credit counseling sector has expanded its commitment to building financial health through high quality financial counseling.

However, while all of these programs have been well-received and most agree that these efforts are worthwhile, they are disparately delivered and are not having the needed impact on consumer financial health beyond the local level. That led to the third and most important conclusion of our panel discussion: Banks can have a greater impact on improving financial wellness for consumers by working collaboratively as an industry. Targeted financial education combined with real-time information on financial matters can help consumers better understand their current situations and develop future plans, particularly for those consumers who are struggling to get their personal finances back on track.

Given recent advances in data analytics, real-time account and personal financial management information is available. The bigger challenge is finding new and more innovative ways to show customers how to use this information in productive ways. For example, one idea to build basic money management skills uses a three-step process involving a financial stress test, counseling on how to set goals and targeted educational sessions.

Think of the possibilities if we as an industry collaborate to combine the best ideas for maximum impact. There are so many opportunities for making a difference for our customers. The panel agreed that we must make it a priority to find new ways of working together to address the weaknesses in the financial health of our customers. Imagine the power of the financial services industry coming together to focus on this issue in a manner similar to the way in which the telecommunications industry took on the problems of teens and texting. What a difference we could make.

Ms. Bianucci is president and CEO of BAI and publisher of BAI Banking Strategies and BAI Banking Strategies Daily.

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