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Three keys to financial success for the rest of us: Engagement, Personalization and AI

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NOTE: The opinions in this article are the author’s and do not necessarily represent the views of Shortlister

Everyone deserves access to the tools and services that can help them achieve financial security. But for too long, the financial services industry has failed to make these tools and services easily accessible to all. Myopically focused on serving higher net worth customers, we have neglected the needs of many who need financial support most and, at the same time, turned off those who are not interested in the investment game.

The fact is, financial stress is most Americans’ constant companion. Many do not own a home, and up to 40% live paycheck to paycheck. Faced with an unexpected expense, such as a $500 medical emergency, many have no savings to cushion the blow. To attend college, many of us must take on crippling student debt. For many, retirement is just a distant fantasy. Even those who have saved steadily have concerns about where they stand. And none of us wants to feel like we need a finance degree just to get our questions answered.

For providers of financial services, whether our goal is growth or social impact, or both, it is clear that we can no longer afford to ignore this extremely large group of customers who struggle with financial stress every day.

Thankfully, the idea that financial services should be accessible and affordable for all is an idea whose time has come. We see three important keys to unlocking financial success for all:

1. Engagement through behavior change science

Financial success for all involves reaching underserved customers who, to a large extent, do not want to be engaged. 

Discouraged and anxious, they must be inspired to hope. This is a big emotional barrier that will not be overcome by education or literacy alone. Fortunately, we can use proven behavior change techniques to unlock the habits, behaviors, and emotional barriers to individual financial health. For instance:

  • Social cognitive theory. By prompting engagement with and learning from peers, employees are able to understand that they are not alone in their challenges with money; it demonstrates tangibly that financial wellness principles do work for real people like themselves. Best of all, a social platform allows employees to share stories and encouragement in a safe environment as they move towards their financial goals.
  • Positive psychology. Customers should be reminded that they have already made some important financial accomplishments; that no matter where they stand now, they can take steps forward; and that it is never too late to build financial security.
  • Gamification. It takes a lot of hard work up front to present complex financial principles in fun, friendly, accessible scenarios or modules that are easy for employees to digest. But the result is worth it: finances are transformed from difficult and stressful to easy and even fun  something customers feel confident about and want to tackle.

2. Actionable advice through personalization

Traditional financial plans are overwhelming in scope and packed with confusing financial jargon. They do nothing to help customers move past feelings of being hopeless or stuck. To empower action and change, financial advice needs to be:

  • Personalized. Customers tend to tune out when presented with generic financial principles seemingly unconnected to their situation. To engage, a customer should be able to recognize that This feels right for me  I can do this.
  • Right-sized. A comprehensive financial plan can be very helpful but in this age of information overload, many customers prefer information and advice in much smaller bites. By giving customers precisely targeted action steps, in manageable bites that can be accomplished in a short period of time, they are empowered to focus, and act.
  • Self-paced. Deep transformation is about more than one or two steps in the right direction the goal is sustained, long-term engagement. Getting support from the financial advice and tools they need so that they feel empowered at each step, they then start to look forward and ask: What’s next?

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3. Easy execution through technology

Offering customers a financial game plan in right-sized, personalized steps goes a long way towards making financial advice actionable, but when trying to reach historically disengaged customers, we’ve learned we need to meet them more than halfway. Essentially, we need great financial software that does the work of executing financial advice for them.  

Several new trends in technology unlock this potential:  

  • Mobile. Gone are the days when customers paid bills or managed investments exclusively at their desks. Whether at work or on the weekends, customers are always connected via multiple devices and constantly making decisions about their money, on the go. If we want them to use our solutions, therefore, these solutions need to be mobile – instantly available, whenever and wherever customers need them.
  • Artificial intelligence. AI can expand our ability to provide great advice, do it more consistently while also adhering to best practices. It allows financial recommendations to be personalized and prescriptive based not only on a particular customer’s data but that of a bigger group. The resulting financial advice is better – and can be delivered much faster. From a business perspective, we also cannot overemphasize the significance of using artificial intelligence to deliver high quality financial services, faster and at lower cost. It makes these services accessible and affordable to average working Americans.

It is almost easier to see the benefits of AI on underserved communities through a global lens.  In South Africa, the company DataProphet is helping insurance companies use machine-learning enabled chatbots to lower customer-service costs. In India, where literacy can be a stumbling block to financial inclusion, voice recognition AI is being explored as a way to help customers complete financial transactions over the phone –  even when a human customer service representative is not present. And in Africa, Abe AI and Absa Bank are analyzing customer spending to identify opportunities to promote healthy financial behavior (FIBR).

  • Fintech in the U.S. Several reputable, social impact fintech companies are gaining traction with better tools for customers stateside.  Early earned wage access, smart accounts that protect you from overdraft fees and help you save emergency funds, and assistance eliminating extraordinary debt, from companies like FlexWage, DoubleNet Pay and Peak Debt Consumption, are a few of the most important and exciting innovations.    

I have long observed that there is a difference between knowing what to do financially, understanding how to do it, and then finally, actually doing it. Building fintech systems that make execution as simple and easy for the customer as clicking a button is the final key to unlocking engagement and financial success for all.

Written by Carla Dearing
Written by Carla Dearing

Carla Dearing is the CEO of Sum180, a mobile financial wellness service that identifies users’ most relevant Next Steps to strengthen their financial picture—and makes those steps easy to accomplish.

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