Ask 10 consumers to define “financial wellness,” and it just might produce 10 different answers. The way the Consumer Financial Protection Bureau (CFPB) defines the term is in four parts: control over finances, capacity to absorb a financial shock, meeting financial goals and the financial freedom to make the choices that allow you to enjoy life.
What might be missing in an informal survey from consumers is insurance. It is part of the financial wellness gospel preached by insurance marketing agency Franklin Madison. Group Vice President of Carrier and Product Management Elizabeth Sheehan told PYMNTS that advanced technologies, in tandem with marketing services, can help financial institutions (FIs) guide their customers to the right insurance solutions at the right time and gain some financial education in the meantime.
The conversation came against the backdrop where finance site GOBankingRates determined not long ago that only 3 percent of individuals queried passed a six-question quiz tied to financial literacy. And as PYMNTS has found, six in 10 individuals in the U.S. live paycheck to paycheck. Though there’s a lot of talk within financial services and other verticals about financial health, wellness and financial literacy, banks may need a bit of help in reaching their end customers and educating them on that journey.
There may be cause to be a bit sanguine, as Sheehan noted. “One thing that we’ve learned a great deal about with respect to financial wellness and awareness is that, in times of uncertainty, people actually take the time to step back and take a look at what their financial needs are,” she said.
The company offers banks and credit unions individualized direct marketing campaigns based on advanced technologies and data analytics to help craft digital and direct mail campaigns. The pandemic, perhaps not surprisingly, has spurred interest and purchasing of insurance products.
“We are even seeing our pay through rates are significantly higher and our retention is significantly higher,” Sheehan said. Initially, as COVID-19 hit our shores, a significant number of people worried about whether their affairs were in order, she said.
But as we’ve been battling the virus and the vaccines are being rolled out, it’s becoming ever more apparent that financial well-being is a personal state, she said, not necessarily described by objective measures.
“Financial well-being is having financial security and freedom of choice both in the present and in the future,” she said. She noted that Franklin Madison had taken some inspiration from the CFPB and elements of its depiction of financial well-being — spanning the capacity to absorb financial shocks, control daily finances and maintain a path toward realizing financial goals.
To help FIs reach out and educate their consumers, Franklin Madison uses analytics to match customers to products. The company, she said, maintains a database that includes decades of campaigns and their related data.
“And then, on top of that, we use our proprietary marketing and response histories to predict who’s the most likely to respond,” she told PYMNTS. “That gets enhanced by our clients’ information that’s provided from our partners. We apply advanced analytical techniques to bring it all together and produce models.”
The models, she explained, are customized for each client’s campaigns and produce a score that in turn is tied to a number of inputs from profitability, client goals and other metrics (including 1,500 customer attributes). This leads to targeted prospects who meet the goals that have been outlined at the start of the campaign.
“Naturally, all of that falls within privacy laws by using unique numeric identifiers to make sure that we’re encrypting personal data and bringing it all together,” Sheehan said. “If it sounds quite complex — it is.”
Speaking generally of Franklin Madison’s campaigns, she said, “A consumer needs to understand that they’re meeting a need and the product they’re purchasing will help them meet that need. … We capture that data and the findings from each event, and it subsequently feeds into our smarter marketing approach for the future.”
One goal of the targeted campaigns and education is to fill what might be seen as a “gap” in the knowledge about insurance products, where there may be an underlying misunderstanding of what insurance covers and why. But consumers need to know what else is out there and what they are missing. Health insurance only goes so far, for example, but what happens when there is an accident and, say, a wheelchair needs to be bought or unexpected child care covered?
Benefits accrue to the firm’s banking partners, she said, who generate noninterest-related revenues and cement stickier relationships with their end customers. Late last year, the company invested in Matic, an InsurTech firm focused on home and auto insurance.
“We see them as a complementary company that has potential to have significant growth in the future as well as we look at other companies or other opportunities in the FinTech space,” Sheehan told PYMNTS.
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