Financial institutions have an opportunity to leverage data and technology to bring financial well-being tools to the everyday life of consumers.
Financial institutions have made huge investments in products and services that should aim to bring better financial well-being to all. But financial well-being is not exclusive to those 'financial moments' when consumers make purposeful decisions on their finances. It is driven largely by everyday behavior and decisions - some big and binary (such as deciding to get a college degree), some small and gradual (such as going to the gym). Despite their huge importance in the economy, financial institutions were operating in a small, and for many consumers, unexciting part of the big playground of life.
The future of banking
Now, strongly motivated by innovative competitors, financial institutions have an opportunity to leverage data and technology in new ways. For example, banks launch chatbots that use cognitive messaging and predictive analytics to help customers find ways to save money and avoid recurring fees. Most apps are still restricted to the banking ecosystem, but the ubiquity of data and the potential for customers to allow their data to be shared more freely, across sectors (accelerated by regulatory initiatives such as Open Banking and PSD2) may radically transform these propositions.
Think about your bank’s AI chatbot being connected to a digital wallet for all your payment needs. Your digital wallet has a wealth of data on specific product purchases every time you go shopping. Your bank knows the total value you tend to spend in certain shops. Now imagine walking into your local supermarket and not only having your phone identify where you are, but also ‘speaking’ to your digital wallet and banking app to identify the trades offs you could make based on your shopping list, or your historic preferences.
Visualizing this on my mobile will help me understand how much I am saving, and what the lifetime impact of such a saving might be on my financial well-being. Meanwhile, embedding gamification in my bank’s app encourages me to maximize my saving.
Imagine if at the end of my weekly shop the 5 dollars I have saved against my “typical” supermarket visit was swept automatically into a savings or investment account? I don’t need to think about it. I don’t need to actively engage with my financial service provider. It all happens seamlessly in the background.