People from all walks of life are struggling financially. According to a recent Gartner publication surveying people based in the US, Canada, UK, Australia and Singapore, 40% of retail banking customers are classified as vulnerable, even though almost three-quarters of those are employed.
Furthermore, 49% of higher-income consumers admitted to having concerns about their future financial situation.
For many retail banking customers, it’s a question of having the tools to maintain and build a safe and secure financial position, now and in the long-term. This simply isn’t the case for a significant proportion of people, who feel they are not able to make the informed choices needed to use financial services that add value to their future.
For this reason, it’s vital that financial institutions not only build trust and confidence with their customers, but also provide tools that are easy to use and that help customers build a stable financial platform.
In this article, we take a look at some of the steps we recommend banks take in helping to financially empower their customers, including Gartner’s Financial Empowerment Support (FES) Framework and how it corresponds with Sopra Banking’s very own Community solution.
Why is financial empowerment important for banks?
Financial institutions have a vested interest in making their customers feel empowered. Per Gartner’s research, there is a clear link between the level of financial empowerment and customers taking positive action, such as making additional deposits or purchasing new services with a financial provider.
Unfortunately, many financial institutions aren’t currently doing enough to support their customers’ financial needs. And furthermore, competitors such as digital challenger banks and other players in the fintech space are offering customers specific and niche products, such as PFMs and automated savings services. Banks and financial institution incumbents that don’t improve their ability to financially empower, could see their customers seeking support elsewhere.
The rewards for banks and financial institutions who are able to support their customers through financial empowerment are great, however. Studies show that customer loyalty increases significantly when providers are able to deliver high-value, impactful experiences, such as those related to financial empowerment. In fact, these types of customers are 3.5 times more likely to advocate for a brand that solves their financial needs during pivotal customer journey moments.
The question remains, though, as to what banks and financial institutions can do to better support their customers.
What can banks do to help financially empower customers?
As those who are employed, and even those classified as high-income earners, are feeling financially vulnerable, clearly financial empowerment is not only linked to the state of one’s personal finances. When it comes to money, being financially empowered isn’t just about how much you’ve got – it’s feeling like you also have the tools to build and maintain financial security.
Factors like the unstable economy and the rapidly changing world we live in can make people feel uneasy. For this reason, it’s so vital that financial institutions, like banks, work with customers to inform them about the financial security they can create themselves, even if the world around them lacks the security they are seeking. These tools will help them feel knowledgeable, in control and, therefore, financially empowered.
According to Gartner, there are ﬁve pillars that financial providers can use to support their customers and make them feel financially empowered. These are: Guide, Educate, Enable, Reassure and Value.
By embodying these pillars, customers can once again gain control of their ﬁnancial journey. So what do each of these pillars mean?
“Guide” refers to helping orient customers on their financial journey, based on their specific needs.
“Educate” is about improving customers’ financial knowledge in order to prepare them to make better decisions. This isn’t just about providing customers with information, but making sure they actually understand banking specific terms, conditions and what all their options are.
“Enable” means equipping customers with the proper tools to help them feel comfortable enough to act.
“Reassure” comes down to lowering customers’ financial anxiety to help them feel secure regarding the benefits financial institutions provide.
Lastly, “Value” is created by listening to customers’ changing needs and giving them the support necessary throughout their evolving financial journey.
How Sopra Banking can help
Sopra Banking Software’s Community is a solution that enables banks to create their own social platform to attract and engage prospective clients and customers. By providing peer-to-peer and expert support, educational content, and a ratings and review process, Community embodies the five pillars outlined by Gartner that help customers to gain control of their financial journeys.
Sopra Banking Software’s Community can, first and foremost, act as a knowledge hub for users on a wide variety of financial services subjects. And unlike mainstream social media platforms, like Facebook and Instagram, Community only includes relevant and pertinent advice for users.
By pooling together industry experts and consultants, a whole range of customers at different stages of their financial journeys and educational material provided by banks, Community really is the perfect guide when it comes to improving financial literacy.
With expert, consultant and peer-to-peer support – as well as educational content around financial products and services – banks can leverage Community to educate their customers around financial literacy.
Furthermore, they can create and provide learning courses with certification for users on topics that may include trading, pre-requisite steps when applying for a mortgage, and much more.
Once a user is familiar with the types of financial products and services available to them, they can use Community to begin better understanding how to make the offer they’re interested in work for them.
This may involve seeking feedback from other users who have been in a similar financial situation, or from experts and consultants who specialize in the relevant sector of the financial services industry.
This way, Community can enable customers to take the necessary and most effective steps in improving their financial futures.
Community includes product ratings and reviews, so that users can see how other customers have experienced a bank’s offer.
Also, by reaching out to experts, consultants and other users in Community, customers can reassure themselves that they have made the right steps per their unique financial situation.
Community is about much more than selling products and services. It’s about creating strong and lasting relationships between banks and their customers. This may, for instance, mean customers suggesting new ideas to banks for future products that are hyper personalized; loyalty and rewards schemes; 24/7 support; and subscription services.
All of this is intended to go beyond traditional financial services and bank-customer relations, adding additional value at every stage of the customer journey.
Click here to find out more about Sopra Banking’s Community solution, and how it can help you to financially empower your customers.