Financial Well-Being: A Core Strategy for Financial Services

The latest Forrester Tech Tide report on financial well-being suggests that financial services firms' ability to serve and retain customers will depend on how much they focus on consumers' financial well-being as a part of their core strategy. The report identifies 18 technology categories that support financial well-being. With a wide range of technologies available to help financial corporations support this strategy, what behaviors and strategies separate the good, the better, and the best?

Consumers as Investments, Loyalty as Dividends

Modern struggles with financial stress fundamentally change consumers' expectations of their financial institutions. Rather than staying with the institution they’ve had for years, they are more open to looking for an institution that will provide the tools they need to succeed financially. This shouldn't be a surprise considering the financial strain individuals have experienced in the past few years with COVID-19 and now with inflation rates exceeding 8.6% in a year. 

Amidst a somber financial reality, there exists a silver lining for financial institutions. More than ever, companies can leverage financial data and digital tools to better understand their customers and drive consumer loyalty by enabling greater financial health practices. This "shared value" can take the form of financial tools and apps that engage consumers and drive outcomes, debt management tools that protect consumers, or promoting personalized financial tools to meet consumer needs.

Companies seeking to drive consumer loyalty should look for technologies that can meet three crucial pieces of criteria:

1. Effective at supporting customers' financial well-being.
2. Commercially available and supported at an enterprise scale.
3. Market traction.

Technology Trends Driving Successful Financial Wellness Solutions

The report also identified major trends that financial services leaders should consider when looking to implement new solutions to help their consumers improve financial health:

• AI is transforming personal financial management tools, enabling systems to understand consumers' financial circumstances better. Companies can use AI to unlock capabilities to help guide, recommend, automate, and track consumer finances. 
• Firms need better access to more reliable data to drive innovation. A shortcoming in data quality will inevitably lead to significant obstacles for companies trying to deliver personalized experiences. Leveraging cleansed data that can be incorporated into real-time solutions for consumers will drive loyalty.
• Successful companies prioritize technologies that help improve customer experiences and drive revenue. Financial institutions should invest in solutions that engage consumers, enable increased financial wellness, and provide access to real-time insights. 

Read the full Forrester Tech Tide: Financial Well-Being, Q2 2022 report to gain additional insights into evaluating financial technologies to support current financial well-being programs.