The new year is only a few weeks old. Many of us have set new financial goals as inflation injects uncertainty into daily life.
The trick, of course, is how to get there, and many of us can use a helping hand.
Doug Brown, president of NCR, told PYMNTS’ Karen Webster that now’s the time for credit unions and banks to help younger consumers improve their financial health over the short term and build wealth over the long term.
After all, the oldest millennials are in their 40s and need to think about the future, family, kids and retirement. And a significant number of Gen Z and millennial (and bridge millennial) individuals are still living at home with their parents and need to cross the Rubicon toward living on their own — and retire at their targeted age of 59.
The financial institutions (FIs) are sitting on the data that they need to create meaningful relationships with younger users — particularly Gen Z, millennial and bridge millennial consumers, as PYMNTS and NCR have found. Most immediately, these same consumers, many of whom are living paycheck to paycheck, need to consider new ways to save money and fine-tune what they spend and when. Increasingly, we all must decide whether we have the money to spend — or we don’t.
The traditional providers, he said, have established themselves as the trusted entities where customers hold their funds — and where those same clients know their funds are safely held.
“This is the time for us to step up at the moment of need,” he said, “and to offer assistance to households.”
A Nudge Here and There
A few well-placed nudges can mean a lot, away from the meme stocks and the momentum names and the cryptos that were darlings coming into 2022 but which ultimately crashed and burned.
Call it a back-to-basics approach, where feedback helps individuals establish goals and track how they’re progressing using time-honored techniques.
“Long-term wealth,” said Brown, “is generated from sustained investment, and compounding growth — and that’s where education comes in.”
By leveraging digital channels and helping these younger cohorts take control of their financial situations now and forever, the positive ripple effects will reverberate for years as FIs engage members and broaden wallet share.
Some Urgency for FIs, Too
The urgency is there for the financial services firms, said Brown. As we face what might be a mild recession, or something more, Brown noted that his own recent conversations with C-level executives at banks and credit unions had been focused on expanding profitable relationships and the all-important feelings of trust and empowerment that have long been a mainstay of smaller FIs’ business models.
While it’s still important for those FIs to gain new members and expand their customer rosters, it’s equally important to generate the highest economic return on relationships that are already in place.
The FIs, he said, “are more aggressive about this — more than ever.”
The data, he said, remains a meaningful way to engage members and broaden wallet share. And while PYMNTS and NCR have found that consumers are willing to offer up their data in exchange for something of value, that value must be relevant. Banks are creating that value by using that data to “look forward,” said Brown, in a personalized way.
“They’re being a lot more proactive in an effort to help inform someone about things they might not know, or which might not be obvious,” said Brown. By way of example, he said, the digital-first FI might conceivably approach a member and nudge them away from buy now, pay later (BNPL) — perhaps it’s not the right payment and debt choice, at least for the moment.
He added that these forward-thinking FIs use transaction and account-level data to analyze patterns of behavior at the individual level to make recommendations and insights that might not be readily apparent. FIs have to engage their members to understand what Brown called the “full picture” of their finances — and must make sure to engage them in context. If they don’t, these younger consumers will lose interest altogether.
Do it right, however, and these members may gain some recognition of their “true” spending patterns and where cash flow “bleeding” can be stanched — maybe they’re carrying too many subscriptions or the interest rate on their credit card balances is set to go up as the Fed continues to boost interest rates. At the same time, the CU can propose a financial product or service that can be enlisted to manage their money better and improve the user’s financial health.
Social media represents a key channel through which the FI can engage with a member. As he told Webster, “banks and credit unions are more likely to be treated as a respected source,” across those channels, “and thus can really help inform people. Social media’s essential to this and you’ve got to be there.”
Looking ahead, Brown said, good financial habits will outlast any macro-level headwinds.
“It’s a matter of finding that practical balance,” he said, “and leveraging those data points to help or create constructive behaviors that can remind people of their goals on a daily basis — and make it all achievable.”
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