Use Financial Empowerment When It’s Needed Most

On both a human and economic level, COVID-19 severely impacted the financial services industry and its customers. Even before the pandemic, tensions swelled beneath the press of wealth and income inequality, racial injustice, and continuing decline in trust of institutions. Now COVID-19 combines these factors with the anxiety sparked by financial vulnerability, the isolating effect of lockdowns and social distancing measures and fear of the virus’ impact on health, the economy and financial stability. It’s a toxic brew of financial disempowerment that saps customers of their sense of agency and makes them feel stuck in their financial journey.

Their fears are justifiable as the number of consumers considered financially vulnerable increases. In Gartner’s 2020 Financial Services Customer Experience Survey, we asked respondents a series of questions based on the Consumer Financial Protection Bureau’s (CFPB’s) Financial Well-Being Scale. The result scores an individual’s ability to control day-to-day and month-to-month finances, absorb financial shocks, be on track to meet financial goals, and make financial choices to enjoy life. The scale thus looks beyond wealth and income to assess financial health, and asks individuals to more broadly consider their financial situation and their ability to act with financial “security and freedom of choice.”

Gartner discovered that 40% of retail banking customers are vulnerable and almost three-quarters are employed. Even 49% of higher-income survey respondents said they were concerned about their future financial situation. The good news is that financial services loyalty and customer experience leaders have the power to restore their customers’ sense of agency.

Financial Empowerment is Mutually Beneficial

To do this, marketing leaders must support financial empowerment throughout digital buying journeys via tools, content and experiences that make customers feel knowledgeable and in control. Any number of sources can support financial empowerment, including a customer’s job, family, personal habits and financial services provider. 

The level of financial empowerment support received across retail, wealth and small business customers is proportional to the likelihood of customers performing a positive action with their provider. Examples include new product purchases, increased deposits, increased service use or referrals to friends and family. Additionally, increased financial empowerment support reduces the odds of negative customer actions, such as leaving a provider for a competitor, decreasing deposits or service use, or leaving negative reviews (see Gartner’s Customer and Industry Recovery by Supporting Financial Empowerment). 

Core Pillars of Financial Empowerment

There are five pillars of financial empowerment support that you—the provider—can translate into actionable steps:

• Guide: Customers want help to better understand their own needs. Orient the customer on where they are in their journey and decision making process.
• Educate: Customers want to understand their financial options. Equip customers with the knowledge needed to traverse their financial journey.
• Enable: Customers want to feel in control of their financial situation. Provide value-added resources that inform and facilitate task completion in the decision-making process.
• Reassure: Customers want to feel better after they interact with a provider. Reassure customers during and after the decision making process.
• Reward: Customers want to be reminded that they matter. Give the customer explicit (e.g., loyalty program) and implicit (e.g., positive experience) reasons to keep coming back and advocate on your behalf.

Support the Moments that Matter

Customer wants and needs vary based on where they are in the customer journey, with traditional industry strategies defaulting  to either life stage/event (“I’m about to retire”) or task (“I want to buy a house”). Gartner’s Financial Empowerment Support Framework offers an alternative to these conventional methods, focusing on pivotal help moments throughout the customer’s journey using Gartner’s Buy/Own/Advocate Framework. See below for several examples across different stages of the 3 cycles. 

Design Financial Empowerment Tools, Content and Digital Experiences

Effective support of financial empowerment requires two key ingredients:

• Prescriptive advice – “The What”: Help customers know what to do and how to do it.
• Practical support – “The How”: Help customers complete discrete, journey-related activities.

Both ingredients can be delivered independently in the appropriate context and oftentimes the ‘practical support’ is used to follow through on the ‘prescriptive advice’. A simple example can demonstrate both ingredients; an educational article on retirement planning in your 50’s (prescriptive advice) accompanied by a retirement calculator (practical support) that estimates how much money an individual should have to retire in their desired timeframe.

Edward Jones offers numerous examples of financial empowerment, using a diagnostic assessment tool like a quiz or questionnaire. The Investor Starting Point helps customers orient their investing competence and identify topics of interest to explore further using a combination of basic information (employment status, household dependents, etc.) and financial hopes and fears.

Investing in resources, projects, and marketing campaigns isn’t the only way to support financial empowerment for prospects and customers. The framework provides a new lens to view the role of financial services marketers as the customer’s champion, shaping the way work gets done across the organization. Financial empowerment support is both a strategy and a state of mind to give customers a sense of control at a time they’ve never felt less in control, resulting in a mutually beneficial outcome for both the brand and the customer.