Cautionary ‘Tale of Two Consumers’ Dials Up Personalized Approach to Financial Wellness

Not all that long ago, as Doug Brown, chief product officer, NCR Voyix Digital Banking, observed, credit unions and banks had a rather simple approach to financial wellness.

The old-school playbook, pre-COVID-19 and before the great digital shift, he told PYMNTS’ Karen Webster, went something like this: “Put your money here — and put it in your ‘rainy day fund.’ And that was it,” he said. Banking was reminiscent of the old Ford Motors maxim in the early days of the automobile, where consumers could get a car in any color they wanted, as long as the color was black.

The one-size-fits all approach doesn’t fit financial services any longer, Brown said, in remarks delivered as part of the “What’s Next in Payments” series, which dives into the lessons learned from the first quarter of 2024, and what lies ahead. The past few months and macro pressures have created a stark narrative — one that Brown said represents a “tale of two consumers.” 

The stock market touched all-time highs, before backing off. The labor market is still strong. But so is inflation, which is proving to be sticky at around 3.5%. Interest rates are still high, and consumers’ credit card debt is at new highs, topping more than $1.1 trillion. Savings accounts are being drawn down a bit as consumers see higher monthly debt obligations and some pressure on the purchasing power of the dollar.

The macro data, said Brown, indicate that some consumer “segments are doing very well, and others are struggling — especially lower-income and middle-income consumers.”

Uncertainty is the order of the day, said Brown, and the old playbook no longer applies. As banks and credit unions (CUs) compete for deposits and client loyalties, the “way to keep people in the fold is to embrace them, and give them the tools and capabilities that help them understand and feel better about these things — in addition to ‘just’ transacting,” said Brown.

Forward-thinking financial institutions (FIs), he said, are using digital channels, from mobile apps to social media, to reach customers — enabled by real-time data and real-time context that helps banking “feel newer” to customers as they explore budgeting, planning and saving.

“Digital gas got to infuse and permeate everything,” said Brown. But in the current environment, FIs must also be aware of the fact that clients are getting out and about and crave in-person interactions (just look at the fact that UnitedHealth shuttered its telehealth operations), which include the branch settings. Human connections are valued, and thus valuable for the banks.

“We still want a combination of things,” in financial services, said Brown, “that include a physical, tactile experience … bringing digital to the story as we go just makes it a richer experience.”

With the right data in hand — provided in collaborative, permissioned fashion from the clients themselves as open banking gains traction — banks can craft personalized conversations and outreach efforts that are holistic and relevant to each customer at each stage of their financial journeys. 

Those outreach efforts can extend to fraud-fighting capabilities, too, as banks seek to keep customers informed and educated about new attack vectors, as artificial intelligence (AI) is increasingly enlisted as a weapon to help uncover fraudsters’ patterns and detect anomalous transactions. As Brown noted to Webster of the emails and text messages links routinely sent to individuals in an attempt to steal their data and gain access to accounts: If it looks suspicious, it probably is. 

“So, stop, pause, and don’t act in the moment,” he advised.

Looking beyond the first quarter, said Brown, and in meeting the needs of the “two consumers … we have to have a long term, longitudinal view … in helping people feel better about financial wellness as part of an overall life package. There’s a deliberative attempt to embrace those consumers, and small businesses, in a more holistic way.”

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