The last few years have been financially tough for many Americans; mass layoffs, increased inflation, a rising rate environment, and many other factors have made it difficult for them not just to meet their financial goals, but in some cases, to manage monthly bills. In fact, a 2021 study by Financial Health Network reported that only 34% of Americans are financially healthy. January is Financial Wellness Month, and a prime opportunity for your institution to promote financial wellness to its customers.
What is Financial Wellness?
The U.S. Consumer Financial Protection Bureau defines financial wellness as “the feeling of having security and financial freedom of choice, both in the present and when considering the future.” Ideally, this includes the ability to manage bills and expenses, pay off debts, withstand unexpected expenses or emergencies, and plan for long-term financial goals. Financial wellness will look different for each of your customers, but in every case, it begins with financial literacy. Unfortunately, a study by FINRA found that two-thirds of Americans would fail a test on financial literacy. As your customers’ community bank, your institution is uniquely poised to educate and set them up for success. Here are a few ways you can help your customers on their way to financial literacy and wellness.
It’s never too early to build healthy financial habits. Yet according to a study by FINRA, only 43% of parents feel ready to talk to their children about finances. Your community bank is in a great position to prepare the community’s children for bright financial futures. Support or promote financial education programs in your local schools—this can also fulfill CRA requirements by providing resources to underbanked communities. Or, introduce banking products for children, such as small-scale savings or checking accounts with a parent’s oversight. This will allow your future customer base to learn about banking and start building positive spending and saving habits.
As a community bank, you are in a prime position to provide credible, unbiased financial education resources to your customers and community. These resources not only provide valuable information but can position your institution as a trustworthy financial expert in the community. These resources can be as simple as pamphlets on various topics available in-branch, downloadable resources or articles on your website, or regular email content. Take stock of what type of financial information your customer base most likely needs, and how they would prefer to receive it.
Taking advantage of technology can help your community bank understand your customer, and your customer make smarter financial decisions. For example, incorporating e-bill channels into your customer’s banking experience will not only wipe out the cost of manual payment, but help your customer keep better track of their expenses.
Offer Custom Support
The strength of any community bank lies in how well it knows its customers. Your institution’s too-big-to-fail competitors will never be able to replicate the personalized service that your staff can offer. That custom support is even more crucial when it comes to promoting financial wellness. One way to do this is to combine the personal relationships your staff has with your customers with the use of data. Gerald Fahner, senior principal scientist for FICO, puts it this way:
“We’re drowning in data and starving for knowledge,’ as the saying goes. Banks often have zillions of data points on each customer, especially when you consider the richness of transaction data. They could be distilling this deluge into a handful of insightful and actionable key measures.”
Some of these measures include giving each customer a financial wellness score, savings propensity score, and other simple numbers that indicate measures of financial wellness. Once you have this information established, be sure to train your front-line employees to dispense the best personal finance advice possible for each customer’s unique situation.
A financially healthy customer base is a win for any community bank, and the many ways you can help your customers get there is a competitive advantage. Your institution can promote financial wellness to your customers not just during the month of January, but all year long.
Choose a correspondent banking partner who will help your bank achieve financial wellness. ICBB is the only locally owned bankers’ bank in the region, and we’re nearly 35 years strong. We serve community banks in Kentucky, West Virginia, Tennessee, Ohio, Illinois, and Indiana. Contact us at email@example.com.