The global pandemic has seen ten years of digital transformation happen in a matter of weeks, and a deepening recession has accelerated long term trends for wellbeing support. So how should the financial services industry respond?
In this webinar for anyone in or working with financial services or fintech, Howard Pull, Head of Strategy – Digital Transformation at MullenLowe Profero presented the results of the company’s latest research while an expert panel discussed its implications.
Hosted by Louise Smith, Chief Digital Officer at Lloyd’s of London, the panel included:
Mullenlowe Profero wanted to look at what the recession means for the relationship between customers and banks. In particular, they explored what digital transformation needs to deliver for young people (because they’re likely to take the hardest financial ‘hit’) and small businesses (because they have similarly limited access to cash, fewer resources and smaller support networks).
Howard presented early results of MullenLowe Profero’s research, which revealed that:
Small businesses are similarly affected.
So when our bank is in our pocket, constantly reminding us of our anxieties, is there now a duty for banks to support wellbeing?
The research showed that banks need to play an active role. 58% of those worried about their money want banks to help them take control and more than half agree that a bank’s role is now to:
Respondents said the features that would help most were tools that:
Half of 19-25 year olds agree that the importance of the local community has increased. 42% want a way to influence how banks fund the local community. But only 35% feel their bank supports the community.
There’s a significant gap to breach here. Because while 60% of 18-25 year olds prefer a bank with better digital tools than more local branches, 60% also feel that banks need a local presence to support local communities.
Over half of 18-25 year olds agree that the last few months have made them seek out brands that do better for the world.
Customers want banks to recognise their own positive behaviour, with:
Summarising, Howard said the three big challenges for financial wellbeing during this recession are:
The full report will be available from MullenLowe Profero on 24 July.
Will banks and financial services brands rise to the challenge of supporting individuals’ financial wellbeing?
John: I’ve been amazed at just how fragile the past few months have shown the system to be. There are three quick fixes for that:
At the minute no more than 15% of us have done all those 3 things.
In terms of general money management, I think all banks have got better. The real challenge is around proper financial planning because that requires a conversation. That’s difficult to do without it feeling like a product push session, or becoming a regulatory/advisory challenge.
Iain: 18-25 year olds is a really challenging segment. They don’t typically have a financial safety net. They don’t write wills. It’s hard to envisage how you increase control on discretionary spend at a time when it’s such a big part of your life.
At Money Dashboard, we had a suite of tools – a self-serve – that was quite passive, so we’ve now changed that Money Dashboard Neon. That’s all about pro-actively encouraging users to get control of their spending and start building that financial safety net.
Arka: Thinking about data, Open Finance is an exciting example of how banks can approach it. The issue really is how do you connect pieces of information to create a single view of financial lives – across bank accounts, savings, credit cards, pensions and insurance?
The first step to financial wellbeing is being aware, and lots of banks are taking steps to make customers more aware. The second step is about tools and incumbents have started doing that. Then it’s about having the right solutions. That’s where data comes in. the solution needs to be self-service in part, but also with offline support. That’s where you can use data to have a conversation because no two people will have exactly the same solution for reducing their financial stress. Personal goals require personal conversations.
Howard: So many of the support options are very formal when customers are in financial distress. Banks will never be your friend. But this is all about moments. People want banks to be a bit more active, a bit more intrusive in a way that’s not creepy – and it’s about understanding when is the right moment to do that.
Arka: One example of banks using these ‘moments’ is MoneySense by NatWest. It’s a financial education programme that reached about 8 million schoolchildren before lockdown. Then when we took it online it reached even more.
Another ‘moment’ is the workplace. Financial wellbeing is something lots of employers are talking about. And lots of banks have been going out to employers helping them support their employees’ financial wellbeing.
We’re also seeing financial education delivered in podcast seasons on Spotify. So digital is enabling us to have conversations where customers are, in their language.
Then we need tools. Squirrel, for example, separates your spend money and save money.
And then we need the solutions. Even before Covid, around 11 million people in the UK didn’t have savings. So what are the everyday steps you can take to change that? How do you incentivise it? Here, you start the discussion in digital, but continue that conversation in person with the people and institutions around you.
Iain: The fact that people’s requirements change over time as they grow older. How, for example, do we encourage our users to build up a financial safety net? The mechanism for that differs from saving for a mortgage deposit or saving for retirement. Because people are looking for different things, there’s a real challenge to design services for everyone. That’s a real issue for banks because every product has to capture a significant proportion of the market to make it viable as a business proposition.
Louise: We talk about human-centric, about bringing experiences to life for customers. How do we use data to drive that? The biggest shock for me in the MullenLowe Profero research is the number of people who don’t want to look at their finances – no matter how great the experience is. How does the experience we create bridge that?
Howard: Part of this is about trust and the value exchange. These are intimate things we’re talking about. When you’re saying ‘I don’t know enough about money and I may be losing my job in a couple of months’ time’ that makes you very vulnerable. So there’s a trust issue: ‘if I tell you this, what are you going to do with the information? What am I going to get back?’ If we expect customers to open up, they need to see more coming back than a generic offer of a loan.
John: The engineering of digital journeys has got better over the years but it doesn’t go all the way to delivering what people want. Do you want a bot to determine your pension? If it offered a 40 year investment would you trust it? Probably not. You’ll want some form of human interaction.
The challenge is how we create better reach. Not everything needs to feel remote or be algorithmic. We’re looking to drive efficiencies but we’re simultaneously looking to creating warmer, more personal experiences and that won’t come purely from digital. It’s going to come from balancing digital with engineered human interaction
John: Take a mortgage application, which might have 200 data points on it. A well trained advisor will get more from that doc and a 10 minute chat with the customer – and be able to make far more personalised, insightful recommendations – than an algorithm could.
So rather than just relying on enhanced data and algorithmic influence, there’s an argument to say let’s use digital technology to have real conversations that are ultimately way more insightful.
Howard: Traditional banks do a great job of engaging communities at events. Neo banks are good at using forums. We need to bring those together, otherwise we won’t enable communities to say what’s important to them.
The recessions experienced by individual small businesses will be very different. Some will be hard hit – others won’t. So what are we doing to engage those communities? How do we up the visibility of our interactions? We survey – but how often do we feed back about what we’re going to do?
Arka: Some banks have already asked how you give a platform to communities – either local businesses or causes. It hasn’t really worked because the platforms have required a certain level of savviness, but now is a great time to try to go further, playing a greater role in nurturing and building confidence in startups. Banks can place an arm around the shoulder of businesses in local communities.
John: Some things are top down; some bottom up. You’d hope that any financial institution would at least get the ‘bottom up’ right at a customer level, one customer at a time. My faith in a bank is built on ‘I’ve had a great experience and my peers have too’. If I hear that enough, I get the feeling they’re doing good things.
Overlay something more top down at a community or global level and you then have this balance between the macro, mid-level and micro. Getting that knitting right requires integrity and a sense of perspective. To date a lot of the sustainability rhetoric has perhaps been a little self-satisfied and that needs toning down. Integrity, authenticity and communicating responsibly are fundamental to people’s belief in this.
Howard: Things are changing. And it’s the money that will capture banks’ attentions. Look at the stock market – digital stocks and ones that are putting sustainability and ethics at their heart are the ones doing well. That will capture banks’ imaginations.
John: We need to show we’re good guys to work with. You don’t do that when you offer an interest rate of 2% which drops to 0.01% after 12 months at the same time as saying you’re someone worth saving with. The industry needs to get its act together on some of the basic product design. You can’t make big societal change otherwise.
Iain: We found people like checking their accounts when it’s good news. But they go into hiding when the news is bad. So how do you encourage good habits in people who don’t want to look? As a sector we’ve maybe not done that too well – but what can we learn from other sectors? Look at what duolingo or MyFitnessPal are doing to build rewarding habits.
Arka: It’s not just for the young. It’s for everyone. But it means different things for different people.
Iain: When you’re older you’re more likely to be wealthier and you’re more likely to take control over that wealth. Wellbeing is for everyone, but there’s a different set of levers for older people and younger people may need more support.
John: The issues change. But no one cohort has wellbeing nailed. Everyone needs more.
Howard: Wellbeing affects everyone, but wealthier people and businesses have more access to help. Younger people and small businesses don’t have that same access to support – so how do we democratise that?
The full report will be available from MullenLowe Profero on 24 July. Email insights@mullenloweprofero.com if you’re interested in receiving the full report.
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