- Improving customer financial wellbeing delivers a big payoff
- Banks need to individualize, not generalize, how they deliver service to their customers
- Banks shouldn't chase perfection, just improvement
Here are two facts that may seem impossible to square:
- Bankers need to be known to support their customers' financial wellbeing.
- There is no one definition of financial wellbeing.
However, Gallup research found that across every consumer banking segment -- retail, insurance or wealth management -- customers are most likely to feel their bank backs their financial wellbeing when they can strongly agree that the bank:
- helps them reach their financial goals
- understands their financial situation
- makes it easy for them to manage their finances
- helps them make better financial decisions
- looks out for their financial wellbeing
- offers solutions to meet their financial needs
- puts their financial wellbeing ahead of the interests of the bank
- has their best interests at heart
Gallup's study finds that the more of these statements a customer strongly agrees with, the more support and understanding she feels from her financial institution, the greater her sense of financial wellbeing (and women do have slightly better wellbeing than men), and the more business she'll do with her bank.
Financial wellbeing is so subjective and contextual that generalized service standards will fail to change customer perceptions.
Bank profitability is enhanced among customers who strongly agree with more of these statements. Just 11% of customers who strongly agree that their bank delivers on only two or three of these elements of support are engaged with the institution. These customers are net detractors -- delivering an NPS of -2.9% -- and just 22% are extremely satisfied. More than half of these customers (52.2%) invest less than 10% of their investable assets with their banks.
The Inflection Point
Importantly, however, Gallup discovered what we believe is an inflection point.
When customers strongly agree with four or more of the statements, 77% are engaged (engagement is itself linked to 37% higher revenue among retail bank customers), NPS is +94.2%, and 91% of these customers are extremely satisfied with their bank. And they offer their banks much higher share of wallet: 18% trust their bank with 80% to 100% of their investable assets.
Obviously, it's in a bank's best interest to discover each customer's definition of financial wellbeing and support it. It's not as onerous as it sounds -- digital and human interactions can be designed to do just that -- but banks that advertise their devotion to financial wellbeing need to know how customers define it.
If you don't know, ask. Begin the home loan conversation, for instance, by talking about the customer's long-term hopes, or include a short survey in the mobile app about the customer's financial needs -- simple conversations can add up to a customer-centric approach that makes individuals feel cared for.
Banks have to discover what matters to each customer at each stage of their financial journey.
Still, the discovery of this inflection point indicates that customers don't expect bankers to perfectly demonstrate all eight behaviors on the list in every interaction. It bears repeating -- banks don't need to deliver flawlessly on each of these items every single time.
But they do need to deliver on them more often than not, and the support of these financial wellbeing needs must be meaningfully felt by the customer.
Perfection Isn't Necessary, but Improvement Is
Remember, financial wellbeing is inherently emotional and individual. Financial wellbeing is so subjective and contextual that generalized service standards will fail to change customer perceptions. Banks have to discover what matters to each customer at each stage of their personal financial journey.
Because no single solution -- no product, service or channel -- will ensure every customer can strongly agree with these statements all the time. Some customers badly need help with some issues and not others. Some products used to be important to some customers but aren't anymore. When a customer's needs change, a banker's approach must change with them.
Banks that make customers feel like most of their financial wellbeing needs are supported -- often banks that get an assist from experts in customer behavior -- will be well-rewarded in increased share of wallet, engagement, NPS scores and revenue. And, in a tightly regulated industry, being the bank that makes customers feel cared for can be a lucrative competitive advantage.
Meet your customers where they are:
- Understand your customers and create more emotional connections, driving loyalty and long-term profits.
- Download our free report to learn how the employee experience affects the customer experience.
- Learn how Gallup helps the financial services industry produce organic growth, even in the toughest times.