It’s Time To Regain Lost Trust
Because of the burdening, ever-present financial stressors, we are entering an economic era where personalised support is the most coveted financial service.
The kids aren't alright
Childhood piggybanks could not prepare them for their grown-up financial realities.
Younger generations are starting to grow wealth in a much different setting than their elders. Not only do they have more banking and spending options, but they are growing up amid perpetual financial instability and business corruption. Between now and 2030, boomers are expected to transfer more than $68 trillion¹ to millennials and Gen Z. As younger generations accumulate wealth, they are living through a global pandemic, record inflation, job insecurity, high living costs, etc. and have the inability to save, get out of debt, buy houses…the list goes on. Are you stressed yet?
Today’s generation doesn’t just want a safe place to keep their money; they want personalised guidance to future-proof their finances. But, sadly, 63% of bankers² say they have not received any advice or communications from their banking institutions about their financial stressors.
Here’s a list of what today’s banking customers are looking for:
- Personalised advice on managing and investing their money
- Proactive suggestions on saving and budgeting.
- Alerts for fees, bill dates, subscription renewal, fraud, etc.
- Customised account insights.
- Real-time support.
Since banks need to be faster to offer customers the financial support they need, younger customers are turning to social media for advice. For example, TikTok videos tagged #personalfinance have garnered 8.2 billion views³.
Here are some popular FinTok creators to check out:
- @humphreytalks is a former Merrill Lynch financial advisor turned social media influencer with over 3.3 million followers on TikTok
- @tatlondono is a bilingual real estate coach with over 2.8 million TikTok followers
- @herfirst100k is a feminist money expert with over 2.3 million TikTok followers
- @erikakullberg is a financial lawyer with over 9.2 million followers on TikTok
Closing the support gap
No, you don’t have to make a TikTok.
So, how can banks give customers the financial support they crave? The answer is in the data. Not only can harnessing data help banks get to know their customers better, but it can help them successfully support clients in this time of need.
Financial institutions that have gained control of their data are rapidly gaining relationship importance with customers, challenging incumbent financial institutions that are slow to digitally transform. FinTech, born out of data, are rated the most trusted financial institution by 51% of Gen Z and 49% of millennials⁴. Plus, some legacy institutions that have boldly moved to go digital and harness their data are now reaping the rewards. JPMorgan Chase, which has undertaken an aggressive digital transformation, has recently been named ‘the number one global large bank’⁵ in Interbrand’s Best Global Brands. Capital One has been on a decades-long journey to bring the entire organisation onto the cloud, adopt AI/ML, and bring customers secure, personalised digital experiences, and has been ranked the US’s number 1 financial institution⁶ across digital trust categories.
Despite the promise of big data to pave the way to outrun the competition and gain customer trust, only 45% of banking executives⁷ are proceeding with a true digital transformation. We know, we know, data can be dangerous for businesses – exposing them to threats and making their customers vulnerable. But nearly 60% of consumers⁸ globally say it's worthwhile to give companies access to personal data it if leads to a better customer experience. These customers know the risk.
But do banks? Banks that do not harness their data stand to lose not only customers but loyalty, trust, and profit.
Lending a Hand
But what does data-driven financial support even look like?
Progressive legacy banks and Fintech alike have gone down several paths to offer customers the support they crave.
- Budgeting & Saving Tools - Rocket Money is a budgeting and saving app that uses personalized, data-driven insights to empower users to save more, spend less, and have visibility and control over their financial lives. Over the past 5 years, the app has saved its members over $245 million by helping them manage subscriptions, track spending, budget, negotiate bills, and more. These services are clearly in high demand as paying premium members surpassed 2 million users⁹ in July 2022, more than doubling year-over-year.
- Robo-Advisors - Robo-advisors, such as Betterment, make investing easy by giving customers the tools, inspiration, support, and peace of mind they need to become better investors. These start by getting to know new users, asking them about their age, investment goals, and risk tolerance, and then assigning them a personalised investment portfolio based on their individual needs that can be easily tracked and managed within the app. In Q1 2021, Betterment announced record growth with net new customers up more than 100% YoY¹⁰ as customers brace for long-predicted market uncertainty.
- Chatbots & Virtual Assistants - Bank of America’s AI-powered virtual assistant, Erica, is personalised, proactive, and predictive. She quickly responds to voice, text chat, or on-screen interactions from clients who need immediate financial assistance and proactively delivers financial insights, alerts, and advice at key moments, making banking seamless. Today, Erica helps nearly 32 million Bank of America clients manage their financial lives through nearly 1.5 million client interactions per day!¹¹
So, how do we get there?
Legacy banks need to start prioritising M&As, builds, tools, and talent that pave the way for a digital-first future. Underfunded FinTech and unemployed tech workers are ripe to support the digital transformation efforts of legacy banks, but someone will have to give in. Either the tech workers will accept the legacy banks antiquated work environments and business operations, or they will have to start editing their PTO, ESG, and DEI plans, offering flexible working environments and potentially even higher salaries to attract those coming from the world of tech. Whichever way you get there, banks prioritising customer support will prove that they can be trusted to guide financial futures. Will that be you?
Want to explore the future of FinTech and what it’ll mean for you? We’d love to help you. Let’s talk.
1. Boomers have more wealth ‘than any other generation,’ but millennials may not inherit as much as they hope, CNBC, December 2022
2. Uncertain Economy Provides Banking With Unprecedented Opportunity, Personetics, July 2022
3. #Personalfinance, TikTok, April 2023
4. How financial institutions can win the battle for trust, EY, June 2021
5. Banking on Digital Transformation: How JPMorgan Chase & Co. Is Winning by Committing to Digital, Simplilearn, February 2023
6. US Financial Institution Rankings Across Digital Trust Categories, eMarketer, June 2022
7. A Snapshot on Digital Transformation in Banking 2023, Qentelli, 2023
8. Global Consumer Survey: Build trust and give people control to securely Open Everything, Axway, February 2022
9. Rocket Companies Announces Second Quarter Results, Cision PR Newswire, August 2022
10. Betterment Announces Record Growth in Q1 2021, Net New Clients Up More than 100% YOY, Cision PR Newswire, April 2021
11. Erica, Bank of America, April 2023