In today’s competitive market, financial institutions need a way to create more stickiness with all consumers, especially with younger demographics who are less brand loyal and more likely to work with virtual financial institutions or fintechs for personal finance. Banks and credit unions strive to offer solutions to entice customers and members, but many continue to struggle. For example, only 14 percent of consumers are using their financial institution’s bill pay services, and of those who do, they tend to be older GenXers and Boomers.
Obviously, financial institutions would prefer to have all of their customers or members leverage their digital platforms to pay their bills. In addition, more and more consumers are over paying for their monthly expenses – an alarming 80 percent of consumers in the U.S. are overpaying for their bills each month. However, these same consumers are also able to recognize substantial savings by renegotiating routine services and monthly bills, cancelling recurring subscriptions or monitoring outages and added fees. The challenge lies in the fact that consumers are busy – no one wants to look through their expenses line by line and navigate through their biller contracts, processes and pricing in order to find those significant saving opportunities.
Financial institutions need to step in and help consumers save money, which will help institutions strengthen customer and member relationships and significantly reduce consumers’ financial stress. Institutions are in a unique position to bridge this gap by forming strategic partnerships with technology providers that offer quick-to-market, cost effective solutions. This not only helps consumers improve their financial wellness, but also allows the institution to target their entire customer/member base (including younger customers and members), converting customers and members into using other/more banking services.
Helping Reduce Financial Stress
Financial stress is way too common in households across the nation, and money concerns are often the main reason many adults are losing sleep at night. In fact, a Bankrate survey explains that approximately half of U.S. adults – from Boomers to Gen Z – are worried and losing sleep at the thought of saving enough for retirement, everyday bills and expenses, paying off debt, healthcare costs and more.
While traditional institutions haven’t always played a role in financial education and wellness, institutions are now increasingly taking the opportunity to help consumers with budgeting and personal financial management. In fact, The Financial Brand recently stated that now is the time for financial institutions to champion financial wellness, helping consumers’ reduce financial stress and take a step toward overall financial wellness, which ultimately supports the credit union’s need to meet consumer expectations and increase customer or member loyalty.
But, how can financial institutions actually contribute to consumers’ financial wellness journey? It starts with innovation, like forming partnerships with technology providers that can help institutions provide tangible benefits and savings.
Forming Strategic Partnerships
In recent years, financial institutions have sought out ways to enhance internal innovations, strengthening existing customer and member relationships while also helping attract new customers and members. For many smaller institutions, it’s easier and more cost-effective to outsource these efforts, which has led banks and credit unions to partner with fintechs and technology providers.
Not only is this beneficial for the institution, but innovation also creates a better customer and member experience. A few of these benefits include growing non-interest income, expanding service offerings, standing out among the competition and helping consumers improve their financial wellness journey.
- Growing non-interest income – With interest rates so close to zero and not looking like they are going to rebound anytime soon, institutions need ways to grow non-interest income in order to generate revenue beyond their traditional interest-based revenue methods. These partnerships set the institution up for success.
- Expanding services – As previously mentioned, many younger customers and members aren’t utilizing credit union’s bill pay services. Partnering with fintechs that offer services to help lower bills or cancel unwanted subscriptions can help banks and credit unions target the right offer to the right customer or member and expand service offerings to younger generation customers or members.
- Standing out amongst the competition – For financial institutions, partnering with technology providers presents a relatively easy way to differentiate themselves in the market and compete with larger institutions and fintechs.
- Improving financial wellness – Overpaying for bills is a direct drag on consumers financial wellness because the savings generated from not overpaying directly impacts how much money consumers are able to allot for savings and debt reduction.
Improving the Financial Wellness Journey
Seeking the right partnership is also key, and financial institutions need an innovative solution that can actually help consumers save money, cancel unwanted subscriptions, lower their monthly services and bills and monitor outages and fees.
- Cancel Unwanted Subscriptions – Everyone falls for it: the free trial. Maybe there’s a movie on a streaming service that isn’t currently part of the consumer’s regular monthly bills, but there’s a small note at the bottom: sign up for our free trial for 14 days and get unlimited access to your favorite shows and movies. So, the consumer enters their information and that’s all. They’ll watch the movie and maybe enjoy the unlimited access, but after 14 days, they’ll cancel it.
Wrong. They’ll forget to cancel it, just like everyone else who’s fallen for that trap. Financial institutions need a partner that enables the consumer to unsubscribe with the click of a button – all within their banking app. No need to call or go online, it can all be done with their banking app, which increases customer and member engagement for the credit union while also saving the customer and member time and money.
- Lower Monthly Bills – Many monthly bills have plenty of room for negotiation, especially considering these services usually have competition. Bills such as cable, internet, phones, alarms, gym memberships and more are all usually able to be negotiated, but typically consumers don’t know that or don’t have time to actually negotiate their bills.
For example, in a Wall Street Journal study, the publication “found 198 different monthly internet sticker prices, ranging from $5 in a bundle bill in Plano, Texas, to $175 for a superfast connection in Anchorage, Alaska—evidence of how much providers tailor services and pricing.” The study also showed that although poorer and richer areas paid similar prices for internet, the higher-income areas received faster speeds for the same price.
- Monitor Outages and Extra Fees – Consumers are often charged additional fees or pay for services even when there are service outages. By partnering with a technology provider that monitors and negotiates credits or refunds when service outages occur, overages are billed or services go unused, institutions are going above and beyond to save consumers’ money, elevating their relationship by offering not only an analysis of customer and member transactions, but also action to create real cost-savings on the customer’s and member’s behalf.
Financial institutions are uniquely positioned as they have consumer information, transactions and more importantly attention (as measured by logins to mobile apps). Pairing subscription management or bill reduction with the transaction eliminates apathy and laziness, making managing bills and costs a seamless, frictionless experience.
Ultimately, institutions can help customers and members save on their monthly expenses by forming strategic partnerships to help their customers and members lower their monthly bills, identify unwanted subscriptions and monitor outages and additional fees. If consumers are spending less on their monthly expenses, they can start saving for emergencies, retirement and more, which helps set them up for better financial wellness and a lifetime of success.
Steven McKean is the co-founder of ApexEdge, a partner-enablement platform that offers monthly bill and subscription management solutions to support the financial health of consumers. For more information, visit www.apexedge.com.