COMPETING WITH GIANTS: THE FINANCIAL WELLNESS ADVANTAGE
COMPETING WITH GIANTS :
THE FINANCIAL WELLNESS ADVANTAGE
Sean O'Brien, Kevin Huang, Mohammad Ibrahim and Zachary Smith
Published: 13 December 2023
Client trust and retention are a clear challenge for the US regional banking sector in the wake of 2023’s bank collapses. To remain competitive and head off the threat posed by larger institutions offering a more expansive suite of services, regional banks should consider enhancing financial wellness capabilities within digital client experiences.
The integration of robust financial wellness capabilities can improve the overall client experience and offer firms a strategic advantage in acquiring and retaining customers.
As personalization and customer engagement solutions provider Personetics has highlighted, bank customers want personalized advice and money management support from their mobile banking app, while more than half would consider switching to a competitor with better money management capabilities.1 And just this month, new Cerulli Associates research found that 63% of retail investors were willing to pay for advice – double the number recorded in 2009.2
In the long-term, financial wellness can provide clients with comfort in better managing their financial needs, which ultimately leads to increased customer satisfaction and retention. Larger financial institutions have already made a push into the financial wellness space, among them J.P. Morgan through its Wealth PlanSM offering and Empower via its 2020 acquisition of Personal Capital.
Financial wellness has become embedded into the digital channels of these and other institutions, with its provision through such channels now seen as a basic requirement. Regional banks must likewise adapt to meet the evolving needs of their clientele to deliver a seamless client experience that can compete effectively with those offered by their larger peers.
New Benchmarks for Financial Wellness
Leading financial institutions have already incorporated benchmarks for financial wellness in their banking applications.
One example is allowing customers to link their external accounts and view all their financial holdings in one place – this is now viewed as table stakes for all market participants. The ability for users to set goals and track their progress is also becoming commonplace, with J. P. Morgan, Wells Fargo, and Bank of America all offering tools to enhance clients’ financial management experiences.
These offerings underscore a commitment to providing clients with a diverse array of sophisticated tools for effective financial planning and monitoring.
Growth Opportunities in Regional Banking
Many regional banks find themselves lacking robust financial wellness features. Critical tools such as budgeting, goal planning, and external account aggregation are noticeably absent from their digital offerings.
Fifth Third Bank is an example of a regional bank whose digital strategy aligns with the evolving needs of customers, offering a full suite of features including budgeting tools, credit score reports, and identity alert services. Huntington is another example, offering users the ability to establish monthly spending limits and set goals to save towards.
Navigating the Path Forward
The imperative for regional banks is clear – if they are to attract and retain customers in today’s shifting and increasingly multi-channel financial services landscape, firms must embrace advice-led solutions and holistic financial wellness as a foundational element of their client experience.
To this end, they should look to reassess their approach to product and experience design, leveraging digital tools, talent and technologies, including generative AI, while also deepening their capabilities around data capture and analytics to gain the more expansive and granular insights that are fundamental for an enhanced understanding customer behaviours and expectations.
