Plenty of banks offer financial wellness tools. But by personalizing these offerings, they can support customers while also reinvigorating their brand, notes Andrew Warren, a leader in Cognizant’s UK & Ireland Banking and Financial Services practice.
One way to achieve this is by taking all the information they have about their customers and turning it into services that enhance customers’ financial wellness. Doing so would be especially welcome in the post-pandemic landscape and the financial uncertainty it has spurred.
While almost every bank now offers financial wellness tools of some sort, whether a budgeting app, a financial literacy course or education on financial planning, these services are generalized to all customers rather than addressing individuals’ personal financial wellness needs. Because financial situations vary greatly across individuals, the truly personalized element is vital.
For example, to help individuals build their savings, banks can use predictive AI technologies to understand customer transactions and cash flow patterns and automatically divert the right amount of extra funds to savings or investments. Royal Bank of Canada says it has helped clients save an average of $358 per month with this type of tool.
Further, by mining debit card data, banks can gain insights into spending habits that they can share with customers or incorporate into personalized offerings. Through AI-driven interventions, personalized “nudges” and micro-level targeting, banks can ensure customers take the steps needed to embrace their financial destiny.
Data and AI underpinnings
Achieving a new hyper-personalized banking future requires the right customer data and digitizing front-to-back-office operations. The financial services industry is arguably the most data-intensive sector in the global economy. Banks, in particular, have enormous amounts of customer data (e.g., deposits/withdrawals, POS purchases, online payments, KYC profiles). Historically, however, they haven’t been very good at utilizing these rich datasets.
By harnessing data responsibly — taking into consideration ethical and regulatory aspects, and striking the right balance between machine-driven and human-centric work — FIs can identify and serve new customer segments of one.
At HSBC, for example, customers can begin a conversation in the bank’s mobile app with an AI chatbot, answering simple questions immediately. Complex inquiries get passed to front-line colleagues. The AI system provides agents with details on the issue and guidance on how to resolve it.
We’ve been working with FIs to pull history and experience via AI into the conversation. We use emotion recognition tools (e.g., intelligent real-time language processing and sentiment analysis) to better understand the context of a customer’s inquiry and when a customer might be vulnerable, even if they’re not aware of it themselves.
This type of information can be harnessed to create personalized engagement plans that customize interactions. These tools can also enable banks to match agents’ personality and strengths with customers to help build deeper, more trusted customer relationships.
Time for a new approach
In addition to the customer benefits of personalization, banks can also realize cost savings and performance gains. According to Boston Consulting Group, hyper-personalization can lower rates of customer churn and boost sales, leading to annual revenue uplifts of 10%.
However, there’s plenty of work to do. Right now, only 45% of consumers are satisfied with the quality of personalized services they receive from their banks.
Here are three key ingredients for progressing toward personalized banking capabilities:
1. Technology
Banks need a mashup of data analytics, AI and automation to deliver personalization, intelligence and predictions at speed. This requires harnessing high-quality data to feed AI/ML algorithms so they can deliver experiences and services that anticipate customers’ needs, wants and desires, as well as combining automation with human supervision to build trust and empathy.
For example, we are working with FIs to link up data sources and introduce AI-powered algorithms that provide a dynamic view of a customer’s financial profile. This helps customers with their financial wellness plans and enables FIs to suggest products that enhance customers’ financial wellness.
2. Talent
Along with adroit technologists, banks need designers, anthropologists, ethnographers and others with social science pedigrees to apply human-centric design thinking to product and service development.
Social scientists are equipped to understand and apply the complexities of human behavior to help FIs predefine user personas and scenarios and use these to shape and personalize the experiences they provide.
In this spirit, we are helping a European state-owned organization to implement a user-centered digital product and service offering, including completely reengineering its mobile banking app. The existing app was plagued by a number of challenges, including a dated technology platform, poor user experience, low adoption and high cost-to-serve across non-digital channels.
We helped the organization define its go-to-market, mobile-first digital strategy, identifying key market-facing propositions based on user research as well as delivering these propositions at scale. Multiple subject matter experts were involved in the project from the outset to ensure a holistic approach, including program/project managers, scrum masters, data architects, human-centric design leads, UX and UI designers, researchers, developers, business analysts and process improvement specialists.
With this project, the bank aims to significantly increase its customer base over the next five years, by combining customer trust with a best-in-class user experience on its re-engineered mobile app, which puts it on par with challenger banks.
3. Culture
To drive change, customer well-being and digitization need to become part of the FI’s culture. This is more than merely embracing Lean methodologies and/or more flexible ways of working. Helping customers achieve financial wellness demands a fresh outlook that maximizes new, agile ways of working and data-driven approaches embedded enterprise-wide — from leadership down to every employee.
Turning the tables
For banks whose business models are based on profiting from customers’ lack of financial wellness (overdrafts, fees, charges, etc.), it can be challenging to adopt this approach. The majority of banks have a high cost-to-serve, with legacy infrastructures and high overhead.
In the face of tough competition from savvy fintechs and non-bank disruptors, however, it’s clear that incumbents urgently need to pivot their approach. FIs that incorporate personalized financial wellness into their business strategy have an outstanding opportunity to support their customers while also reinvigorating their brands — and realize growth and cost savings at the same time.
Andrew Warren is Head of Banking & Financial Services and a member of the Executive team at Cognizant UK & Ireland. He leads a team responsible for driving results for Cognizant’s financial services clients……
This isn’t surprising as Sony has been a household name since the early ‘90s and their current position at the top is just Sony’s natural spot. The Japanese company is heavily invested in several new technologies including blockchain and AI, and the speed at which their testing and investments in the space are rolled out is remarkable.
Last week it was announced that Sony have developed a high-speed processing technology that facilitates data transactions for a new breed of database platform called Blockchain Common Database (BCDB). The work was done as part of a transportation-focused Mobility as a Service (MaaS) initiative led by the Netherlands Ministry of Infrastructure and Water Management back in 2019.
What makes this technology interesting is that they have achieved successful execution and storage of seven million transactions per day, simulating a real-world scenario where buses, cars, bikes and taxis all share their location and other metrics.
Sony, through their investments arm Sony Financial Ventures (SFV), have participated in the latest funding round of the Securitize platform. This platform, which specializes in digital securities, has a strong connection to Japan and Asia but their roadmap is focused globally.
With all the work and investments they are putting into the enterprise blockchain space, Sony will be a strong contender for next year’s 2021 Blockchain 50 list. The list has already welcomed the presence of one of Sony’s competitors, Samsung.
Overall, Sony is showing a strong desire and willingness to innovate in using blockchain technology for supplementing their existing infrastructure and business use cases. From those efforts, the net winners will be their consumers and partners, who will benefit from access to better and faster services at an eventually optimized price.
I am a blockchain architect based in New York. I have deep technical expertise in digital assets, crypto and blockchain protocols, and systems. My coverage includes opinions and research pieces on the latest trends in the crypto world.
The U.S. economy shrank for a second quarter in a row this year, a second estimate from the Bureau of Economic Analysis confirmed Thursday—once again signaling the start of a technical recession even as economists predict signs of a slowdown will only grow in the coming quarters, likely prompting the government to officially declare the economy has entered a recession.
The U.S. economy shrank at an annual rate of 0.6% in the second quarter despite average expectations originally calling for a 0.3% increase—marking the second consecutive quarter of negative gross domestic product growth and thereby signaling the economy has entered a technical recession, the Bureau of Economic Analysis reported in a second estimate released Thursday.
The figure was worse than the 0.5% decline economists were expecting, but ticked up from the 0.9% decline estimated last month.The government blamed the worse-than-expected figure on declines in residential investments (or home buying), federal government spending and business inventories, but said an uptick in exports and spending helped economic activity improve from last quarter’s decline of 1.6%.
According to one working definition, a recession comprises two consecutive quarters of negative GDP growth, says Wells Fargo senior economist Tim Quinlan—but it’s not the official one: Instead, the definitive call is up to the National Bureau of Economic Research, which defines a recession as “a significant decline in economic activity” lasting “more than a few months.”
Quinlan points out four of the six factors the NBER relies on to declare a recession—production, income, employment and spending—continued to signal expansion through May, but he notes production appears to be “losing steam” and income gains are struggling to keep up with inflation, all while unemployment claims rise and consumers start spending less.
Like other economists, Quinlan isn’t convinced economic indicators last quarter were indicative of a current recession, but he warns the economy is slowing and “it is starting to feel like [entering one] is only a matter of time.”
“We do not think the economy is in recession at present, but if our forecast is correct, this is not so much of a head fake as it is a harbinger of worse to come,” says Quinlan, who argues the negative GDP growth in the first half of the year isn’t likely a function of weak underlying demand but instead due to “one-off” volatile factors such as net exports and inventories. “We expect the loud wailing of an actual recession to begin early next year,” he adds.
The government will update its estimate, based on more complete data, for a third and final time in September.
Though economist projections continued to call for a return to growth in the second quarter, the Federal Reserve Bank of Atlanta’s GDPNow model in July began signaling the start of a technical recession, pushing its GDP forecast into negative territory after economic data showed consumer spending dropped in May. “The model’s long-run track record is excellent,” say DataTrek analysts Nicholas Colas and Jessica Rabe, pointing out its average error has been just 0.3 points since the Atlanta Fed started running it in 2011.
Ahead of the GDP print, the model projected the economy shrank 1.2% last quarter. It now projects the economy will grow 1.4% in the third quarter. The Fed’s withdrawal of pandemic stimulus measures and interest rate hikes this year have fueled concerns of impending recession. In July, Bank of America economists warned clients that prolonged inflation and the resulting interest rate hikes have unleashed a “worrying deterioration” in the economy, and particularly in the once-booming housing market.
“The Fed has become more committed to using its tools to help restore price stability, with a willingness to accept at least some pain in the process,” they said, predicting the economy will fall into recession over the next year.
The United States may be better off than you think. Currently, the big concern and preoccupation for people is whether or not the U.S. will be heading into a recession. It’s the big boogeyman hiding in the closet that people are all supposed to be afraid of.
Of course, it’s not pleasant when the economy contracts and people lose their jobs, savings and investments. However, you can’t simply look at the job market, economy and financial markets in a snapshot picture. There are ebbs and flows over time. Short term, the situation may look bleak. Looking over the horizon, everything could turn around, as history has proven.
Recessions Create Opportunities
Many well-known, fabulously successful companies were started during recessions and economic downturns. Recessions, stock market plunges and periods of high unemployment occur relatively regularly. It’s baked into the system. The U.S. economy swings like a pendulum in boom and bust cycles. For context, if you are a Baby Boomer, you have lived through nearly a dozen recessions.
During a downturn, people lose their jobs. With a lack of available options, a laid-off worker who harbored dreams of being an entrepreneur now doesn’t have any excuses to wait any longer. There is a feeling of, “It’s so bad that it can’t get any worse, so I might as well take the shot.”
As other people are downsized, you may be able to recruit talent for your emerging enterprise. When the economy craters, it creates new opportunities for budding business owners to solve new problems.
Stock Market Crashes And How Long It Takes To Recover
In 1929, the stock market crashed and the U.S. entered into the Great Depression. Without the public assistance Americans have access to now, families were left helpless. Wall Street professionals who lost their life savings had to panhandle for food. The stock market kept falling for a few more years and hit rock bottom in 1932. The market tumbled more than 80% lower than its all-time highs. It took over 20 years to recover.
In 1987, the “Black Monday” October crash happened. Similar to present-day events, a long bull-market run that kept the stock market moving higher without any corrections to cool it off ended badly, plummeting 22.6%. It took roughly two years to make a comeback.
In the late 1990s into 2000, the U.S. endured the dot-com boom and bust. Speculation in the newly emerging tech sector reached a fever pitch. Stocks were priced at ridiculously high levels based on the euphoria that these new tech darlings would change the world overnight.
Instead of valuing companies based on traditional price-to-earnings metrics, Wall Street research analysts pointed to the number of clicks a website received as evidence that the tech company was a terrific buy. However, the bubble ultimately burst in March 2000. The S&P 500, a benchmark used to gain an overall perspective of the financial markets, cratered—free falling more than 50% from its highs. It took about seven years to recover.
Shortly after the dot-com burst, there was another bubble emerging. In 2008, banks made reckless loans that enabled people to purchase homes that they couldn’t afford, if the economy cooled down. The U.S. had a housing bubble that lead to a subprime mortgage crisis. Sure enough, when the adjustable interest rates kicked in, families couldn’t make the higher monthly mortgage payments. Many lost their homes. The S&P 500 lost nearly half of its value. Around two years later, the market climbed back.
At the onset of the Covid-19, the stock market plunged more than 30% in February to March 2020. In this case, due to interventions by the U.S. federal government and Federal Bank actions, it only took about six months to climb back up again.
After all the gyrations, the end results were largely positive. You would have come out ahead if you were brave enough to invest during these difficult times. For example, a small investment of $100 in the S&P 500, at the beginning of 2009, would have represented a 582.13% return on your investment by the 2021 year-end.
It’s hard to come to grips with the economy and stock market vicissitudes. Recessions happen on a regular basis, as it’s part of the capitalistic cycle. The U.S. may need to endure some rocky times for the foreseeable future. However, if history repeats, it may take some time, but Americans will soon see better days.
What’s likely to happen is that after a few years, the government and Fed will forget about the past and enact more accommodative policies that will lead to another bull run, which will go to excess and ultimately burst. Then, the cycle will start all over again.
Everything is more expensive right now, and you’ve done what you can to cut back your spending. You brew coffee at home, you don’t walk into Target and you refuse to order avocado toast. (Can you sense my millennial sarcasm there?)
But no matter how cognizant you are of your spending habits, you’re still stuck with those inescapable monthly bills. Although we can’t swipe these off the table for you, we do have a few money moves you should make right away…
1. Stop Overpaying at Amazon
Wouldn’t it be nice if you got an alert when you’re shopping online at Amazon or Target and are about to overpay? That’s exactly what this free service does.Just add it to your browser for free, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.
Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.
In the last year, this has saved people $160 million. You can get started in just a few clicks to see if you’re overpaying online.
Chances are you do some of your shopping online. Whether it’s pet food from Walmart, a new outfit from Macy’s or even a flight home for summer vacation, you’re probably leaving money on the table. A free website called Rakuten has the hookup with just about every online store you shop, which means it can give you up to 40% cash back every time you buy something.
We spoke to one Penny Hoarder reader, Colleen Rice, who has earned more than $526.44 since she joined Rakuten. For doing nothing. Seriously. Rice says she uses Rakuten for things she already has to buy, like rental cars and flights. It takes less than 60 seconds to create a Rakuten account and start shopping. All you need is an email address, then you can immediately start earning cashback at your go-to stores through the site.
Your cash will be deposited directly into your bank account or via a check in the mail every few months. Talk about money for nothing.
3. Get Paid Up to $140/Month Just for Sharing Your Honest Opinion
If you’re turning blue in the face waiting for a raise at work, it might be time to quit holding your breath and start speaking your mind to someone who wants to listen. Brands want to hear your opinion to help inform their business decisions on everything from products and services to logos and ads — and they’re willing to pay you up to $140 a month for it.
A free site called Branded Surveys will pay you up to $5 per survey for sharing your thoughts with their brand partners. Taking three quick surveys a day could earn up to $140 each month. It takes just a minute to create a free account and start getting paid to speak your mind. Most surveys take five to 15 minutes, and you can check how long they’ll take ahead of time.
And you don’t need to build up tons of money to cash out, either — once you earn $5, you can cash out via PayPal, your bank account, a gift card or Amazon. You’ll get paid within 48 hours of your payout being processed, just for sharing your opinions. They’ve already paid users more than $20 million since 2012, and the most active users can earn a few hundred dollars a month. Plus, they’ve got an “excellent” rating on Trustpilot.It takes just a minute to set up your account and start getting paid to take surveys. Plus, right now, you’ll get a free 100-point welcome bonus just for becoming part of the community.
4. Buy an Apartment Building (Even if You’re Not Filthy Rich)
The uber wealthy 1% have access to exclusive, lucrative real estate investments that seem totally out of reach to the rest of us. But not anymore. A company called CalTier lets you invest in commercial real estate — specifically, multi-family apartment complexes across the country — for as little as $500.
Traditionally, you’d need a six-figure income or a million-dollar net worth to invest like this. Instead, CalTier lets you invest like the big wigs in the real estate world, even if you’re not rich. Investments in multi-family housing have outperformed the S&P 500 for the last 20 years* — and it’s expected to grow another 33% this year alone.
CalTier also gives you a 30 day money-back guarantee. And if you have any questions along the way, you can talk to a real human to get them answered. Ready to join the ranks of wealthy and institutional real-estate investors?
Here’s the thing: your current car insurance company is probably overcharging you. But don’t waste your time hopping around to different insurance companies looking for a better deal. Use a website called EverQuote to see all your options at once. EverQuote is the largest online marketplace for insurance in the US, so you’ll get the top options from more than 175 different carriers handed right to you.
Take a couple of minutes to answer some questions about yourself and your driving record. With this information, EverQuote will be able to give you the top recommendations for car insurance.
Financial wellness at a personal level..Cognizant
To put it into perspective, more than 40% of UK adults are now considered “financially vulnerable,” and nearly 40% of UK adults have seen their financial circumstances deteriorate since February 2020.
