Is Financial Wellness the Key to Long-term FI Survival?

As I continue to explore the issues that young millennials and Gen Zs face related to conducting financial transactions, one thing is clear: there is a significant amount of stress related to financial issues that is experienced by those younger members of our population.  This is not just my opinion; this point was confirmed in a recent Financial Brand article which indicated that in a survey conducted by the American Psychological Association, respondents aged 18 to 25, 82% said that “money is a significant source of stress.” This would indicate that as financial institutions, we have an amazing opportunity to provide “stress reduction” for these younger potential customers.  Yet, it seems that as an industry, we are failing to provide the soothing salve that might make our institutions a destination for younger customers seeking financial clarity.

For institutions that are still focused on superior in person customer service, that is near the bottom of the list of desirable features that younger customers are seeking. But wait, you say, we also moved heavy into digital services, offering fast efficient self-service banking.  That’s good, but in the absence of any meaningful financial wellness, it still leaves a huge gap in overall satisfaction with younger customers. In the Financial Brand article, they highlight three major areas where FIs need to step up their financial wellness game. Those are: 1) Get serious about transactional data, 2) Make financial wellness personal, and 3) Offer financial wellness tools.  Let’s examine each of these in more detail.

Get serious about transactional data – As a financial institution, you have a built-in advantage over third party financial services. You have access to specific transactions and related data representing your customers’ payment journey. The amount of data you possess, even in situations for transactions that are not specifically with your institution, is more than sufficient for you to be able to provide meaningful financial wellness advice and recommendations to your customers. The problem is that either through apathy or concern over privacy, banks are hesitant to use even the most rudimentary data mining techniques that are available. Never mind that these younger customers not only see this type of data mining across all of their digital experiences, yet banks are still so worried about being “creepy”.  The fact that most young people have an expectation that companies they use are data mining and using that data to paternalistically assist them in making good choices (think Amazon or Zappos advising, “Others who bought X also bought Y …”) means that when bankers avoid any meaningful use of data, it is interpreted as being way behind the times. We are trying to not be creepy while the potential customers we seek see us as not being savvy enough to provide meaningful services to them.  What a bizarre Catch-22!  Financial institutions need to “get over” their reluctance to effectively data mine and start offering meaningful insights.  Which leads into …

Making financial wellness personal – Effective financial insight cannot be generic. Younger customers expect experiences that are tailored specifically for them. That is what they get from nearly every other digital experience. So why would they be interested in generic financial wellness advice, supposedly created for an 18- to 24-year-old?  Are they starting their first transaction account ever? Are they starting their first small business? Or perhaps a more experienced entrepreneur?  Very quickly you can see that individual financial wellness is not only a requirement to meet expectations but totally doable based on the specific information you have access to. The specific patterns of spending, even down to specific categories of spending (i.e.: dining versus clothes), what level and types of payments are triggering overdrafts, even creating a high-level budget of spending is all possible and desired by these younger customers. At a minimum, you can assist in setting up notices and provide warnings in behavior that limits or avoid fees.  When a young customer sees that you have their best interest at heart and are not trying to “manufacture” fees, then their view of the FI as a paternalistic partner grows.

Offer financial wellness tools – it’s one thing to decide to embark on providing financial wellness education to your customers. However, it’s quite another to back that up with the availability of specific financial wellness tools that enable the customer to easily access them.  Your digital systems already have the ability for self-directed notices based on account activity, but you need to take the next step and advocate for their use. That means creating a marketing campaign to ensure that these young customers know about and then ultimately use the notice capability you offer. Take advantage of available resources to create fun, engaging videos that provide the requisite education. Other tools like the ability to warn or remediate fees might take some changes within the FI to accommodate but are doable.  Large FIs are providing grace amounts or grace days for overdraft items. Can your existing core system provide that capability?  Find out.  Then you can make an appropriate recommendation regarding any changes in how you govern your overdrafts to go forward.

I get that this may rub some traditional bankers the wrong way. Why are we bending over backwards to enable younger customers who seem to not be able to keep track of their available balance?  Well, before you throw out the younger customers with the bathwater, consider that as your super seniors and older baby boomers pass away, you MUST replace those customers with younger ones to maintain your customer base.  We can hope and wish that the young millennials and Gen Zs would have the same attitude and aptitude towards banks and banking as their parents and grandparents, but there is no evidence that they will do so. While it’s possible that their behaviors may evolve to that of prior generations, the fact is that for now, we must provide financial wisdom and related financial wellness tools in an engaging way that aligns with the younger generation’s expectations.

Read the full story from the Financial Brand HERE. I welcome your comments, contact me at