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On both a human and economic level, COVID-19 severely impacted the financial services industry and its customers. Even before the pandemic, tensions swelled beneath the press of wealth and income inequality, racial injustice, and continuing decline in consumer trust in institutions. Now COVID-19 combines these factors with the anxiety sparked by financial vulnerability, the isolating effect of lockdowns and social distancing measures and fear of the virus’ impact on health, the economy and financial stability. It’s a toxic brew of financial disempowerment that saps consumers of their sense of agency and makes them feel stuck in their financial journey.
Their fears are justifiable as the number of consumers considered financially vulnerable increases. In Gartner’s 2020 Financial Services Customer Experience Survey, we asked respondents a series of questions based on the Consumer Financial Protection Bureau’s (CFPB’s) Financial Well-Being Scale. The result scores an individual’s ability to control day-to-day and month-to-month finances, absorb financial shocks, be on track to meet financial goals, and make financial choices to enjoy life. The scale thus looks beyond wealth and income to assess financial health, and asks individuals to more broadly consider their financial situation and their ability to act with financial “security and freedom of choice.”
Gartner discovered that 40% of retail banking customers are vulnerable and almost three-quarters are employed. Even higher-income consumers are worried, with 49% of those surveyed responding that they were concerned about their future financial situation. The good news is that financial services loyalty and customer experience leaders have the power to restore their customers’ sense of agency.
Financial Empowerment is Mutually Beneficial
To do this, marketing leaders must support financial empowerment through digital buying journeys through tools, content and experiences that makes them feel knowledgeable and in control. It can be supported by any number of sources, including a customer’s job, family, personal habits and financial services provider. Supporting financial empowerment helps customers by educating them about their options and fees, enabling them to stay on track toward their goals, and reassuring them in their decisions.
Gartner also noticed a consistent trend across retail, wealth and small business where the level of financial empowerment support customers received was proportional to the level of positive customer action with the provider. Among those actions include new product purchases, increased deposits, increased service use and customers recommending their provider to others. Additionally, increased financial empowerment support reduced the odds of customers leaving a provider for a competitor, decreasing their deposits or service use and leaving negative reviews (see Gartner’s Customer and Industry Recovery by Supporting Financial Empowerment).
Core Pillars of Financial Empowerment
There are five pillars of financial empowerment support that you—the provider—can translate into actionable steps:
Guide: Customers want help to better understand their own needs. Orient the customer on where they are in their journey and decision making process.
Educate: Customers want to understand their financial options. Equip customers with the knowledge needed to traverse their financial journey.
Enable: Customers want to feel in control of their financial situation. Provide value-added resources that inform and facilitate completing tasks in the decision-making process.
Reassure: Customers want to feel better after they interact with a provider. Reassure customers during and after the decision making process.
Reward: Customers want to be reminded that they matter. Give the customer explicit (e.g., loyalty program) and implicit (e.g., positive experience) reasons to keep coming back and advocate on your behalf.
Support the Moments that Matter
Customer wants and needs vary based on where they are in the customer journey, with common industry approaches to solving for this need defaulting to either life stage/event (“I’m about to retire”) or task (“I want to buy a house”). Gartner’s Financial Empowerment Support Framework offers an alternative to these conventional methods, focusing on pivotal help moments throughout the customer’s journey using Gartner’s Buy/Own/Advocate Framework.
Design Financial Empowerment Tools, Content and Digital Experiences
Effective support of financial empowerment requires two key ingredients:
Prescriptive advice – “The What”: Help customers know what to do and how to do it.
Practical support – “The How”: Help customers complete discrete, journey-related activities.
Both ingredients can be delivered independently in the appropriate context and oftentimes the ‘practical support’ is used to follow through on the ‘prescriptive advice’. A simple example can be used to illustrate using an educational article on retirement planning in your 50’s (prescriptive advice) accompanied by a retirement calculator (practical support) that estimates how much money an individual should have to retire in their desired timeframe.
A great example of financial empowerment comes from Edward Jones, one of many brands Gartner benchmarks that offers some sort of diagnostic assessment tool, quiz, or questionnaire. The Investor Starting Point helps customers orient their investing competence and identify topics of interest to explore further using a combination of basic information (employment status, household dependents, etc.) and financial hopes and fears.
Investing in resources, projects, and campaigns isn’t the only way to support financial empowerment for prospects and customers. The framework provides a new lens to view the role of financial services marketers as the customer’s champion, shaping the way work gets done across the organization. Financial empowerment support is both a strategy and a state of mind to give customers a sense of control at a time they’ve never felt less in control, resulting in a mutually beneficial outcome for both the brand and the customer.