The Consumer Financial Protection Bureau (CFPB), interviewed consumers and financial professionals from around the country and identified four key components of financial well-being in their report released in 2015. They feel in charge, can handle a financial shock, are on track to reach goals and have the flexibility to make choices.
Unfortunately, not all consumers can achieve full financial health and have those four components. Many customers have no idea how to manage their finances efficiently. This has led to massive loans and obligations on credit cards with high-interest rates, which has had a detrimental impact on various financial institutions. However, the following guide can help the banking industry develop good financial habits in its customers, which is a win-win for everyone involved.
Proactively Support Customer Budgeting
Taking action before an issue emerges is an essential part of being proactive. Banks owe it to their customers to remind them to maintain an accurate record of their monthly revenue. By doing so, you can help your clients design a savings plan, pay off debt, and put money away for the future.
However, many people struggle to efficiently budget their money despite the availability of budgeting tools that can make budgeting much more straightforward. So your institution needs to capture and evaluate events in real-time and then make real-time recommendations to your clients.
Your organization has an important role to play in promoting successful budgeting among your customers. Utilizing technologies that aid in tracking and planning expenditures is one method for achieving this goal.
For example, budgeting can be simplified by using tools already available on the customer’s banking website and mobile app. By making these online tools even more user-friendly, the likelihood that people will continue to utilize them increases as well.
Provide Personalized Financial Products and Services
Personalization can help your institution provide answers to your consumers before they even recognize they have an issue. According to a survey by Salesforce, 66 percent of customers expect companies to understand their unique needs and expectations. Personalization can be achieved by using your customers’ personal and historical data.
To offer personalized financial services and products in savings, budgeting, lending, and investing, banks need a digital approach that prioritizes customer data and provides a truly contextualized experience with hyper-personalized communication and product offer and provision.
This can be done if all of your branches, apps, and contact centers work together to provide a consistent client experience. Customers will be more likely to return to your bank if you provide them with a more personalized experience. In addition, providing a customized client experience can help you achieve your goals and increase your profits.
Help Customers Automate Cash Savings
You can help your customer to set up an automatic savings plan. They can designate a portion of their income for automatic deposit into an account. This type of savings plan is excellent for those who want to slowly develop their savings without having to deposit money every few weeks physically.
The automated management of cash savings is connected to how clients budget. The automation process compels customers to keep to their savings goals. For example, a chosen amount is automatically deposited into the individual’s savings account every time they receive a paycheck from their work.
Send Low Balance Alerts
Your customers may be so preoccupied with their work that they forget to check the balances of their bank accounts. Banks can help by providing customers with real-time alerts whenever their account balance falls below a predetermined threshold. As a result, customers will have a better chance of avoiding incurring bank overdraft fees as a result of this.
Encourage Important Financial Planning
You can help your clients by offering financial planning advice and recommendations. Using financial planning, your clients can better manage their finances and achieve their goals and objectives while navigating the inevitable financial bumps on the road at every stage of their professional life.
Financial institutions can assist customers in organizing their finances, both short- and long-term finances by providing financial advice. For example, you can guide how to finance large purchases and plan holiday activities.
The Use of Technology Is Important
Technology plays an essential role in assisting your clients in the process of developing sound financial habits. For instance, applying RPA in banking can help banks and other financial institutions increase their efficiency by enabling real-time customer interaction. It can also be used to eliminate errors and inefficiencies across processes, including software, operating systems, and application platforms.