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.
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.
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. Bianucciis president and CEO of BAI and publisher ofBAI Banking Strategiesand BAI Banking Strategies Daily.
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