English (En)
  • Italian (It)
  • Portuguese (Br)
  • Spanish (Es)
  • Japan (Jp)
  • France (Fr)
  • German (De)

Recent Coverage

Current Money Management Solutions Aren’t Meeting Expectations

Financial pressures are challenging consumers and putting a strain on how far their money can go. That’s why more and more credit union members are looking to their institutions for more help with money management. In response, many credit unions are turning to technology to modernize how they serve their members and help them improve their financial well-being.

A recent Forrester report, “Spotlight on North America – Banks and Credit Unions Need to Promote Customers’ Financial Wellbeing” gives insight into the opportunities and challenges for credit unions in supporting their members.

The report, based on more than 500 interviews with banking and credit union executives globally, found that 79% of banks and credit unions in North America provide some form of money management solutions. However, 88% of them reported that less than half of their customers are actively using their money management tools.

Credit union members have come to expect help with financial well-being, especially during a time in which inflation is on the rise and driving the soaring cost of living. Credit unions want money management solutions that will help them retain their members, acquire new ones, and increase member lifetime value. Yet the numbers show that neither credit unions nor their members are getting what they want.

Why are the money management solutions credit unions use falling so short of everyone’s expectations? In their report, Forrester gave a blunt diagnosis of the problem.

“Many of these solutions fail to drive behavior change and deliver tangible outcomes for customers, as they are too static and generic, not relevant to customers’ specific needs and unpredictable financial lives, still require a lot of manual input, and place too much cognitive load on the customer.”

Consumers don’t think of seamless digital experiences simply as a convenience. They need and expect these experiences to help improve their financial well-being, manage day-to-day finances, plan for the short and long term, and ultimately, make the right financial decisions to achieve financial goals.

Another recent survey revealed that 42% of banking customers want personalized advice and money management support within their mobile banking app. The same is true for credit union members.

To deliver personalized, proactive money management solutions for their members, credit unions need to invest in advanced money management capabilities that leverage technologies and data.

The Forrester report also reveals that only about a third of banks and credit unions leverage insights from their customers’ financial data. This is mainly due to a lack of quality data and data standardization, which impacts their ability to perform analytics, optimize personalization, create insights and advice, and provide seamless digital experience.

Below are three actions credit unions can take to ensure their money management tools deliver the value they and their members expect.

1)   Cleanse and enrich members’ transaction data and apply machine learning models to better understand a customer’s finances and predict cash flow.

2)   Generate engagement and influence customer behavior through proactive, personalized insights and recommendations.

3)   Automate certain aspects of financial management to ease customers’ cognitive load.

Without these improvements, digital money management tools will not provide the business outcomes or experiences the credit unions need to drive growth. However, making these changes is easier said than done and credit unions have a few challenges to overcome.

The Forrester report identified those challenges as:

  • URGENCY – They haven’t recognized that customer expectations over what they a money management solution has offered has now gone far beyond the capabilities of their current offerings.
  • MANAGEMENT BUY-IN – 42% said this was a problem for them. It’s hard to push for improvements in this area without having a true commitment at the management level.
  • ADVANCED TECHNOLOGY – The struggle to select the right tech stack or to align over whether to buy or build new technology.

43% of banks and credit unions expect their money management solutions to produce an increase in customer and member engagement. Without that engagement, generating any significant business impact from money management is just too difficult.

Here are immediate opportunities and ways that credit unions can move closer to their goals.

  • Strategy – Start with the end: Becoming a trusted financial coach and guide to your members. Then work backward from there.
  • Metrics – Shift away from measuring things like numbers of logins or time on the app and toward metrics that better capture impact – like customer satisfaction and task completion rates.
  • Vendor Scorecard – The report suggests a set of capabilities that credit unions should look for when trying to find their ideal money management partner.

Adjusting their business and operating models, adopting the right technology, and selecting the right technology partners can empower credit unions to gain a deeper understanding of their members’ needs and how to better help them reach their financial goals. This in turn will help credit unions become trusted financial advisors while meeting their business objectives.

About Author:

Jody Bhagat is President of Americas at Personetics, a global leader in data-driven personalization and customer engagement for financial institutions. In this capacity, he is responsible for driving customer impact and establishing market leadership with the company’s Self-Driving Finance proposition. Personetics delivers personalized insights, advice, and automated programs to help customers improve their financial well-being. Previously, Jody was a Partner at McKinsey, where he helped financial institutions execute digital transformation programs to drive organic growth. He has also held digital leadership roles at leading AI-driven fintechs and North American Banks, including U.S. Bank, Wells Fargo, Providian, and Citizens Bank. Jody has an MBA from Northwestern University and a B.S. from The University of Michigan.

Want to explore how your bank can harness the power of AI to engage and serve customers? Request a demo now

Want to explore how your bank can harness the power of AI to increase deposits and drive business impact