According to a recent article from the Washington Post, despite the current unprecedented growth the economy has seen over the past 10 years, many Americans are still struggling. Small emergency funds, underfunded retirement savings and low wages despite a low unemployment rate mean individuals are still struggling to establish financially stable presents and futures for themselves.
As a result, Americans are looking for any type of support they can find, especially from sources close to their money. Financial institutions, with oversight on consumers’ finances, have the unique ability to use this data to help customers guide their spending habits and personal budgeting, creating a unique value proposition that can differentiate financial institutions as brands.
This concept applies not only to those struggling, but those with larger-than-average incomes who still struggle to meet their financial goals. Things like retirement, mortgages, student loans and good old fashioned monthly budgeting are all areas of opportunity for financial institutions to provide expertise. Analytics can help drive smart decision making in these areas, and brands that capitalize on this thirst for information will be rewarded with lifelong customers.
Emergence of Millennials
As mentioned, many Americans continue to struggle, despite rampant, unbroken economic growth over the past decade. With that said, Millennials have managed to enter the wealth accumulation phase of their lives, and are now beginning to engage in more serious financial endeavors, like buying homes and contributing more seriously to their retirement savings.
With this increasingly affluent demographic, financial institutions should be working hard to secure Millennials (currently ages 22-37 years old) as lifelong customers. Notably, this demographic has digital tendencies, which lends itself to financial advice. They’re more used to sharing data than older generations, and they expect that data to be utilized in a way that results in customized recommendations. Financial institutions can be more consultative in their approach with these customers, offering anything from budgeting tips to pre-approved forms of credit Millennials can take advantage of.
Ability to Harness Data
Quite simply, organizations should utilize customer data because they can. Consumers are more open to their data being used than ever before, and even expect organizations to do so. Similarly, organizations’ fears around big data should now feel somewhat assuaged, as they can often find financially realistic and targeted data solutions, from software to analytics consultants. Organizations should think about the most important customer metrics that can be utilized, and work with a data expert to make the most of that information.
Data-Driven Communication (How to Apply Harness Data)
Once your organization has customer data, make the most of it.
- Find ways to offer promotions to existing customers. Particularly, think about how you can streamline their experience. If you want to offer them a specific type of loan, make sure they’re pre-approved, and provide them with some metrics on why that loan would benefit them.
- Offer genuine value, and worry about monetizing it later. One underserved aspect of the financial services world is helping individuals with their monthly budgets. Think about ways your organization can provide a truly customized monthly budget based on individual customers, and offer them financial advice. A consultative approach can build trust and be a differentiator with customers, and any money you put into an initiative like this will offer a return on investment in the lifetime value of that customer.
- Learn about the types of customers you want. Beyond customer-facing analytics, your team can utilize customer data to learn more about your most profitable customers, and how to increase and target these types of individuals in the future.