Financial wellness is about customer lifetime value
Today’s highly volatile economic environment makes the case for Financial Wellness more relevant than ever. Easily influenced by geopolitical tensions and shifts in the market, a policy can be passed in one country, causing a surge in the price of gas on the other side of the world
just a day later. High interest rates, rising cost of living and market volatility, makes consistent saving more challenging, but even more important. Without proper support, individuals too often find themselves trapped in cycles of debt.
Financial services focus on three key areas: making money, saving money and protecting money. Where profit is at top of mind, making money can easily take precedence. However, saving money is an integral part to ensuring long-term, profitable gains in financial services.
Our behavioral analyst, Jessica Nicole, emphasised the importance of Financial Wellness in saving and protecting money and revealed how behavioral algorithms can facilitate healthy relationships between customers, their money, and, subsequently, their financial service provider.
“focus shifts away from maximising short-term gains in the present, to nurturing a healthy and sustained future with your customers”
Physical wellness versus product-based wellness
The term ‘wellness’ can take on multiple meanings. Some financial services, especially insurance providers, view wellness from the perspective of physical health. Through partnership programs with businesses that promote healthy lifestyles, insurance providers save money by reducing the number of medically-related claims made by customers.
Another form of wellness promotes a healthy relationship between your customer and the services or product you provide. In financial services, this means striking a balance between having your customer spend enough money, but to not overspend and go into debt.
What these two approaches have in common is an attitude of forward-thinking. With Financial Wellness in mind, focus shifts away from maximising short-term gains in the present, to nurturing healthy and sustained customer lifetime value.
Spend Personality to promote Financial Wellness
Getting customers to be financially well holds behavioral change at its core. Our Spend Personality Module has various capabilities that can promote healthier financial habits. “One of the ways is to use Spend Personality as a Financial Wellness indicator,” says Nicole.
This approach is customer-facing, allowing customers to indicate their ideal spend ‘self’, juxtaposed with the algorithms that reveal their true spend personality. Spend Personality can then assist your customer in adjusting habits to become the spender they want to be. For
example, perhaps an Enthusiastic spender has indicated they would rather be an Industrious or Intentional spender. Spend Personality could assist by guiding customers towards less impulsive, more thought-through and practical purchases.
From the back-end, Spend Personality can inform how you communicate with individual customers. “The idea is that, by tailoring messaging language based on Spend Personality, you can encourage people to open a spending or a savings account or actually save something,” says Nicole. For example, you would likely offer an Experiential personality type a flexible savings account with time sensitivity. Experiential spenders are also likely to enjoy travelling. “You could encourage them to save towards a trip or holiday, giving them a 15 to 20 day notice period to access their money,” she says.
Promoting Financial Wellness waters the ground from which financial services grow. By using behaviorally-backed algorithms like Spend Personality, banks can work with their customers to build healthier financial habits, serving both parties in the long run.
